UAE gold jewellery demand jumps 461% as consumer confidence improves

Increased COVID-19 vaccination and return of tourists fuel demand

An employee arranges jewellery in a shop at the Gold Souq in Dubai, United Arab Emirates March 24, 2018. Reuters/Christopher Pike

An employee arranges jewellery in a shop at the Gold Souq in Dubai, United Arab Emirates March 24, 2018. Reuters/Christopher Pike


UAE - Gold jewellery demand in the UAE jumped 461 per cent in the second quarter to 7.3 tonnes as compared to 1.3 tonnes during the same period last year as consumer confidence improved due to increased Covid-19 vaccination and the return of tourists, resulting in higher purchase of the precious metal jewellery.

However, quarter-on-quarter gold jewellery sales fell by a tonne, according to World Gold Council data released on Thursday.

Overall gold demand rose 319 per cent from 2.1 tonnes to 8.8 tonnes during the comparative period while gold bars and coin demand in the UAE rose 71 per cent year-on-year from 0.8 tonnes to 1.4 tonnes.

The council said demand in the UAE increased 461 per cent year-on-year but was 21 per cent below 2019 due to high gold prices and expat sentiment having been soured by India's second Covid wave difficulties. When compared to 2019 figures, tourist purchases were also impacted, it said.

As compared to second quarter last year, the UAE market is now open for passengers from more countries, resulting in increased buying of gold jewellery.

The US dollar gold price averaged $1,816.5 per ounce during Q2, six per cent higher than in Q2 2020.

Globally, overall gold demand declined in Q2 by one per cent year-on-year to 955.1 tonnes while bar and coin demand stood at 243.8 tonnes, an increase of 56 per cent year-on-year, achieving its best quarter since 2013.

Jewellery demand continued to rebound from 2020’s Covid-hit weakness, although it remained well below typical pre-pandemic levels, partly due to weaker growth in Indian demand. Jewellery demand in Q2 improved to 390.7 tonnes, a year-on-year increase of 60 per cent while demand for H1, at 873.7 tonnes, was 17 per cent below the 2015-2019 average.

"As the global economic recovery continues, we have been encouraged to see consumer demand returning, with strong year-on-year growth in jewellery,” said Louise Street, senior markets analyst at the World Gold Council. “But investment is a more complex picture. Despite evidence of strategic buying from both individuals and institutions, tactical investors had a more mixed impact in the first half of the year. This was partly seen through gold ETFs where inflows in the second quarter only slightly dampened the effects of the preceding quarter’s sell-off.”

The Council projected that jewellery demand could be in the range of 1,600 to 1,800 tonnes for the year, well above 2020 levels but below the five-year average.

“Continued global economic recovery should support consumer demand for global gold jewellery throughout 2021, although continued Covid disruption in some markets – most pertinently India – will provide a headwind. While pent-up demand could serve as a boost, a strong price recovery in H2 could push jewellery demand towards the lower end of the range,” it said.

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