Market Trends
• Record-high bullion prices
• Diamonds and lighter gold jewellery
• Shifts in consumer behavior
• Lab-grown diamonds
A visit to Dubai’s Gold Souk, a traditional hub for 22-karat gold jewellery, reveals a changing landscape. Buyers are increasingly opting for diamonds and lighter gold jewellery as prices reach record highs. • In Dubai, 22-karat gold jewellery is a traditional favourite for weddings, religious celebrations, and as a family investment. However, with bullion prices hitting a record high above $3,400 an ounce, buyers are turning to diamonds and lighter gold jewellery. • According to Andrew Naylor, head of Middle East and Public Policy at the World Gold Council, the high prices are having a two-fold effect: on one hand, buyers are seeking gold as a safe-haven asset, but on the other hand, the prices are dampening jewellery demand. • Retailers at the Gold Souk, such as Damas Jewellery, are seeing a decline in demand for 22-karat gold jewellery due to high prices, with some buyers opting for diamonds instead. Market Impact
• Dubai’s Gold Souk
• UAE demand for gold jewellery
• Price swings and consumer behavior
• Indian purchasing patterns
Dubai’s Gold Souk has been a magnet for gold buyers for at least 80 years, with Iranian and Indian traders initially setting up shop in the area. The souk has a tradition of 22-karat jewellery for adornment and investment, but as gold prices rose by 27 per cent last year, demand for gold jewellery in the UAE fell by around 13 per cent. • According to the World Gold Council, jewellery demand in the UAE fell by around 13 per cent in 2024, outpacing the global decline of 11 per cent. • The WGC also noted that price swings, rather than price levels, are increasingly shaping consumer behaviour, particularly in India, which is a key driver of sales in the UAE. Lab-Grown Diamonds
• India’s lab-grown diamond exports
• UAE diamond imports
• Lab-grown diamond market
• Grand View Research projections
One sign of economising is the rise of lab-grown diamonds, with India exporting $171 million worth of lab-grown diamonds to the UAE in 2024, up nearly 57 per cent from 2022. • India’s exports of cut and polished diamonds to the UAE in the April-November 2024 were up 3.7 per cent. • The UAE is projected to grow as a major diamond market, with Grand View Research forecasting an annual growth rate of 5.9 per cent to reach nearly $2 billion by 2030. Trade Tensions
• US trade tensions and market impact
• Alternative markets and production hubs
• Indian diamond exporters’ contingency plans
• Malabar Gold & Diamonds’ outlook
Recent trade tensions with the US have accelerated talk about finding alternative markets and production hubs, with Indian diamond exporters exploring options such as shifting production to the UAE. • One executive at a major Indian diamond exporter noted that the company’s contingency plans included shifting some production overseas, including to the UAE. • However, Shamlal Ahamed, managing director of international operations at Malabar Gold & Diamonds, remains bullish on gold jewellery demand, noting that price-conscious buyers may wait for a dip, but such declines are often short-lived. Expert Insights
• Russ Mould, investment director at AJ Bell
• Andrew Naylor, head of Middle East and Public Policy at the World Gold Council
According to Goldman Sachs, higher gold prices are likely to dampen demand for jewellery, a classic example of how high prices can affect consumer behavior. • Russ Mould, investment director at AJ Bell, said: “Higher gold prices are likely to dampen demand for jewellery, in a classic example of how the best cure for high prices is high prices.”
• Andrew Naylor noted that the high prices are having a two-fold effect, with buyers seeking gold as a safe-haven asset, but also dampening jewellery demand. Lab-grown diamonds are one sign of the changing market, with India exporting $171 million worth of lab-grown diamonds to the UAE in 2024, up nearly 57 per cent from 2022. This is driven more by design preferences than pricing, according to Shamlal Ahamed, managing director of international operations at Malabar Gold & Diamonds. While price-conscious buyers may wait for a dip, such declines are often short-lived, Ahamed notes. Grand View Research forecasts an annual growth rate of 5.9 per cent for the UAE diamond market, projecting it to reach nearly $2 billion by 2030. This outpaces the global growth forecast of 4.5 per cent, making the UAE the fastest-growing market in the Middle East and Africa. Trade tensions with the US have accelerated talk about finding alternative markets and production hubs, with Indian diamond exporters exploring options such as shifting production to the UAE. However, Shamlal Ahamed remains bullish on gold jewellery demand, noting that such declines are often short-lived. Expert insights suggest that higher gold prices are likely to dampen demand for jewellery, as seen in the decline of 13 per cent in UAE gold jewellery demand in 2024. This highlights the need for consumers to adapt to new price levels, as seen in the rise of lab-grown diamonds and the growth of the UAE diamond market.