In Dubai's Gold Souk, bullion's record run brings little joy for jewellers

Manya Saini - Reuters - 22/04
In the bustling Gold Souk in Dubai, dubbed the "City of Gold", 22-karat gold jewellery is a traditional favourite for weddings, religious celebrations, and as a family investment.
  • 'City of Gold' long a magnet for gold buyers
  • Traditional buyers seek 22-karat gold for weddings, ceremonies
  • Record prices hitting demand, retailers say
  • UAE gold jewellery sales fell by around 13% last year
DUBAI, April 22 (Reuters) - In the bustling Gold Souk in Dubai, dubbed the "City of Gold", 22-karat gold jewellery is a traditional favourite for weddings, religious celebrations, and as a family investment.
Yet with bullion prices hitting record highs above $3,400 an ounce, there are signs of change, as buyers look to diamonds and lighter gold jewellery, instead.

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While U.S. tariffs and other factors have added fire to already hot demand for gold as an investment, the impact is different for gold jewellery, according to Andrew Naylor, head of Middle East and Public Policy at the World Gold Council (WGC).
"In markets like Dubai, this creates a two-fold effect: on one hand, you see stronger interest in gold as a safe-haven asset, on the other, high prices dampen jewellery demand."
At Dubai’s Gold Souk, retailers told Reuters they are seeing this trend, as current prices prompt shoppers to look for alternatives.
"There are no potential customers nowadays because of the gold prices," said Fahad Khan, a sales representative at retailer Damas Jewellery.
"It’s a little bit tough to afford gold, so I think it’s better to go with diamonds," said Lalita Dave, 52, as she browsed around the Gold Souk.

LAB-GROWN DIAMONDS

Dubai has been a magnet for gold buyers for at least 80 years, starting with Iranian and Indian traders, both cultures sharing a tradition of 22-karat jewellery for adornment and investment.
Yet as gold prices rose 27% last year, demand for gold jewellery in the UAE fell by around 13%, outpacing an 11% drop globally, according to the WGC.
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