Gold sustains its appeal despite soaring prices in UAE market

Arabian Post

21 hours ago

Gold's steadfast position as a safe haven for investors in the UAE has withstood the test of rising prices, continuing to attract attention amid a global economic landscape marked by inflationary pressures and market volatility. Despite record-high valuations, the precious metal remains a symbol of financial security for those seeking stability in uncertain times.
The price of gold has been climbing steadily, driven by a combination of factors, including global economic instability, inflation fears, and fluctuating currencies. The World Gold Council reports that, while the price of gold has reached unprecedented highs, it is still viewed as a reliable store of value. This trend is particularly evident in the UAE, where both investors and consumers are prioritising gold over other investment avenues. The UAE's jewellery sector, while impacted by the high cost of gold, has adapted by offering lighter pieces, adjusting making charges, and providing interest-free payment plans to make gold more accessible to the wider public.
The allure of gold has persisted in the UAE due to its deep cultural significance, particularly among residents who view the metal as an important part of their financial portfolio. Gold has long been a preferred choice for investors, seen not only as a hedge against inflation but also as a traditional investment that carries a sense of stability. This cultural affinity with gold is evident in the sustained demand for both jewellery and bullion.
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With the price of gold having surged to over AED 240 per gram for 24-karat gold, a figure that reflects global trends, jewellery retailers in the UAE have been under pressure to strike a balance between maintaining profit margins and catering to their customers' demand for affordable luxury. In response to this, many jewellers have adjusted their pricing models by offering lighter pieces, which maintain the appearance of luxury while reducing the amount of gold used in production. These adjustments have allowed consumers to purchase items at lower prices, even though the underlying cost of the precious metal has skyrocketed.
To further alleviate the financial burden on buyers, several jewellery outlets have introduced zero-interest instalment plans. These arrangements allow customers to spread the cost of their gold purchases over several months without incurring additional interest, making high-end gold jewellery more accessible despite the escalating prices. This shift has proved successful in maintaining consumer interest, ensuring continued sales in a challenging market.
At the same time, traders have noticed a marked increase in gold purchases by UAE nationals, who are adding gold to their portfolios as a way to hedge against economic uncertainty. Financial experts argue that gold is an attractive alternative to other investment options, particularly amid global economic upheaval, as it provides a sense of protection against inflation and potential market downturns. Many investors are turning to gold as a long-term asset, preferring its inherent value over more volatile stocks or real estate.
While jewellery retailers are adjusting to the soaring gold prices, there is also a growing trend among investors to purchase gold in its bullion form, rather than as intricate jewellery pieces. Gold bars and coins are seen as safer, more stable assets that can be stored with minimal risk of depreciation. Investors are favouring gold in these forms because they offer the same benefits as jewellery but without the added costs associated with crafting and design.
The UAE's position as a major gold hub in the region remains strong, with Dubai continuing to be one of the world's leading gold trading centres. The Dubai Gold and Commodities Exchange has seen growing volumes in gold futures contracts, as investors seek to profit from the fluctuating prices of the precious metal. Despite the challenges faced by the retail jewellery sector, the demand for gold as a commodity is undeterred, suggesting that the market for bullion will continue to thrive in the long term.
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However, the high prices have not been without their challenges. The jewellery sector has reported that some buyers are holding off on large purchases, opting instead to wait for potential price fluctuations. This cautious approach has slowed down sales of high-end jewellery, with some consumers refraining from purchasing until they feel more confident in the stability of the market.