The UAE’s gold jewellery sector saw a huge uptick in sales during the last quarter of 2020 on the back of high tourist influx, but it wasn’t enough to lift the market from a pandemic-driven slump.
Gold jewellery demand in the UAE jumped 80 percent in the fourth quarter last year compared to three months earlier. Demand went up from 3.8 tonnes in Q3 2020 to 6.9 tonnes in Q4 2020, the World Gold Council (WGC) said in its latest report.
Bookings for travel to the UAE surged during the final weeks of the year, fuelled by pent-up demand from visitors around the world, including key markets where lockdowns were re-imposed such as the United Kingdom and other European countries.
“[The huge jump in Q4 demand was] thanks to a return of some degree of tourist demand and decent festival buying as the gold price dropped,” the World Gold Council report said.
However, for the whole of last year, gold jewellery demand still fell by 20 percent when compared with the demand in the previous year.
In Saudi Arabia, the decline was steeper, at 26 percent, and this was due to the continued impact of value-added tax (VAT) being levied on gold jewellery.
Gold jewellery demand fell 13 percent year-on-year to 515.9 tonnes in the fourth quarter of 2020 worldwide, resulting in a full-year total of 1,411.6 tonnes, which is 34 percent lower than what was recorded in 2019.
“While demand improved steadily from the severely depleted Q2 total, the coronavirus continued to impact consumer behaviour,” the report said.
Total gold demand also dropped by 28 percent year-on-year to 783.4 tonnes in the fourth quarter, making it the weakest quarter since the midst of the global financial crisis in the second quarter of 2008.
While the demand shrunk, gold supply also took a hit and was 4 percent lower year-on-year, the largest annual fall since 2013.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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