The historic Dubai Gold Souq in Deira is on the front line of a relentless price surge.
But traders, experts and customers have said the market for the precious metal is mixed.
While some say sales have slowed over the past few weeks, the overall picture is complex, with some customers switching to gold bars rather than jewellery to avoid extra costs.
They also say demand is resilient with the global price surge only reinforcing gold's status as a safe haven and the run was even encouraging buyers who did not traditionally view it as an investment.
“I think people have to realise … even if there is a dip, it won't be to the extent where they're going to make a huge saving, so they might as well buy at the current prices,” Arjun Dhanak, director of Kanz Jewels, told The National.
“The price increase hasn't really had a huge effect on the buying.” There was no change from March 2024 to this year, he said, but there has been a small decrease of “about 10 to 15 per cent” over the past month.
'Insane demand'
He said he had not seen any evidence of people wanting to sell but some were exchanging old for new and others were deciding to buy gold bars.
“People wanting to buy investment bars have gone up,” he said. “They're … coming to buy because they're expecting it to go higher. People are sticking with the gold.”
Yahya Mandavi, manager at Al Almas, said sales were lower but he hoped this would change. More customers were buying raw gold rather than jewellery to avoid manufacturing charges.
“The demand on that has gone insane. The demand for jewellery has plummetted,” he said.
“It's the first time gold has hit this high, so we are just as lost as everyone else.” The surges were being driven by “mostly politics” and “demand”, Mr Mandavi added. He estimated sales were down about 27 per cent on last week but said the long term was harder to assess.
Gold retailers in the UAE are resorting to a range of measures including reduced making charges, attractive payment plans and exchange schemes, and lightweight jewellery collections, but the price has continued to rise on the back of geopolitical tension, US President Donald Trump's tariff campaign and concerns over the global economy.
Mr Dhanak said it was difficult to analyse the impact of the surge because many people have already bought their gold for Diwali and Christmas, with the typically slower summer season is approaching.
The UAE's 'unique profile'
The cost for a gram of 24 carat gold at the souq surged to a record Dh412 on Monday but by Thursday morning had fallen back to Dh400. Gold globally has surged by more than 30 per cent this year.
Andrew Naylor, head of Middle East and public policy at the World Gold Council, said the metal closed in March at a record high of more than $3,100 per ounce.
Mr Naylor said current dynamics were also playing a role with a weakening dollar due to concerns about the US economy supporting gold prices across all major currencies. “At the same time, we are seeing renewed interest from investors … and central banks remaining significant buyers,” he said.
Crucially, Mr Naylor said the UAE had its own unique profile. “While we have seen a decline in jewellery demand in volume terms due to high prices, consumer spending has remained resilient,” he said. “Buyers are adapting by choosing lighter pieces, but they are still investing in gold.”
He said there had been a shift in demographics with the traditional Indian tourist market reducing after the nation cut its import duties.
“This has created room for growth from other tourist markets,” he said. “The UAE is becoming increasingly global as a tourism and retail destination, with visitors from Europe, Central Asia and China now contributing to demand.”
Dubai has a historic link to the gold trade stretching back decades. And the historic Deira souq is on the front line of that trade.
Mr Dhanak agreed more buyers were coming from outside the traditional Asian markets, such as westerners. “I don't think they saw gold as something which had investment value to it,” he said. “I think they're seeing that now.”
The global gold market is broad and diverse. Mr Naylor said central banks remain a key source of demand “with 2024 marking the third consecutive year of net purchases exceeding 1,000 tonnes as they seek to diversify reserves and reduce reliance on any single currency”.
Investors were also turning to gold as a hedge against inflation and as a counterweight to uncertainty in equity and bond markets, he said.
“Jewellery demand – which accounts on average for 33 per cent of annual demand – has been affected by high prices, particularly in terms of volume. However, total spending remains high and many consumers are still purchasing gold, albeit in smaller amounts,” said Mr Naylor.
“It’s gold’s demand profile that makes gold unique – no other asset class has this diversity of demand and use. As both a consumer good and investment asset, gold performs differently to other asset classes and is one of the reasons it has been viewed as a diversifier and mitigator of risk.”
Shamlal Ahamed, the Dubai-based managing director for international operations at Malabar Gold and Diamonds, said: “Our customers are staying the course [with] steady demand across our showrooms.
“While some cautious buyers may take a temporary step back, such moments are typically fleeting. This enduring trust speaks volumes about gold’s perceived strength, stability, and lasting worth in uncertain times.”
Will prices come down?
Mr Naylor said the conditions that have supported gold's rise remain but it was not possible to forecast the price.
“Inflation remains a concern, real yields are elevated and investors continue to face a high degree of market and policy uncertainty,” he said. “In this environment, gold’s role as a strategic asset remains highly relevant.
“Central bank buying, investor interest, and a cautious macroeconomic outlook all point to a market that still has solid foundations.”
Back at the souq, customers were browsing the lavish displays of gold bars, ingots, necklaces and ornate rings.
“If we feel like buying, then we will buy,” said Mathias, a customer from Goa in India. “It is like real estate, you never know when it is a good time to buy.”
