The UAE’s gold retail market had a great start to the year, as jewellery demand surged to its highest level in about five years in the first quarter, thanks to high visitor traffic during Expo 2020 and improved consumer sentiment, according to the latest data.
Gold jewellery consumption in the UAE reached 12.5 tonnes in the first quarter of 2022, up by 50 percent compared to the previous year, the World Gold Council said in its new report on Thursday. Demand during the quarter was the strongest since Q2 2017.
“Demand benefited from attendees attracted by Dubai’s Expo, while the lifting of all COVID-19 restrictions and higher energy prices buoyed domestic consumer sentiment,” the report noted.
Expo 2020 effect
Dubai had enjoyed high volume of tourist traffic since the start of the Expo 2020 in October last year. Around 3.4 million visitors arrived in the emirate in the fourth quarter of 2021, achieving 74 percent of the total pre-pandemic tourist arrivals of Q4 2019, according to Dubai’s Department of Economy and Tourism (DET).
In its report, the World Gold Council said that the rise in jewellery consumption in the UAE served as the biggest contributor to the Middle East region’s overall growth in demand.
The whole region’s jewellery consumption amounted to 47 tonnes in the first quarter, registering an 18 percent increase compared to the previous year. It also defied demand trends in other markets, with global jewellery consumption registering a 7 percent year-on-year drop at 474 tonnes largely due to softer demand in China and India.
“The Middle East extended its recovery from the pandemic-induced slump of 2020, recovering to its highest level since [the first quarter of 2019],” the report said.
Global gold demand
Despite an 8 percent rise in gold prices during the first quarter, total global demand for the precious metal increased by 34 percent year-on-year to 1,234 tonnes, the highest since the fourth quarter of 2018 and 19 percent above the five-year average of 1,039 tonnes.
The World Gold Council said that the invasion in Ukraine, coupled with rising inflation, led to higher gold prices and consumption.
Gold exchange-traded funds had their strongest quarterly inflows since the third quarter of 2020, supported by safe-haven demand. Holdings went up by 269 tonnes, more than reversing the 174 tonnes in annual net outflow from 2021.
However, investment in gold bars and coins fell 20 percent to 282 tonnes, primarily due to COVID-19 lockdowns in China and high local prices in Turkey.
(Reporting by Cleofe Maceda; editing by Seban Scaria)