UAE gold shoppers switch to 'extra-lite' 22K jewellery for investments

Dubai: Start small – gold shoppers and investors in the UAE are getting a chance to do that. It makes sense as the Dubai gold price remains at a steep Dh377 a gram for 22K and with forecasts suggesting further increases are well on their way.  

Shopper interest in gold has now shifted to ‘low-weight’ jewellery, and UAE gold retailers are hoping to catch this trend early. There are more promotions for gold chains and necklaces that weigh just 5-6 grams, bangles of 2-3 grams, and earrings and lockets of 1-1.5 grams in 22K.

In the upcoming promotions for the Indian festival of Onam in early September, lighter jewellery will also be the centerpiece of UAE gold retailers’ offers.

“22K is still the preferred choice - more so for those who buy gold as investments too,” said an industry source. “18K sales remain a niche and not exactly an investment option because of the making charges.  

“If we get 30 shoppers buying on average Dh2,000-Dh3,000 lower weight gold a day, that’s still better than one or two shoppers spending D10,000. At current gold prices, shoppers are changing how they buy. Investing in lighter 22K jewellery is one of the bigger trends Dubai Gold Souk is starting to see.”  

Typical 22K low-weight options comes with much lower making charges than standard jewellery pieces, which is now a major issue with UAE gold shoppers. “If we give these lower weight jewellery, there are better chances of shoppers visiting our stores,” said a retailer. “If we only focus on bespoke jewellery, at current gold prices, shopper visits will drop significantly.”

That’s what UAE jewellery retailers worry about most these days – how can they sustain a business that’s seeing regular monthly drops in demand. This is more so for the bigger retail brands with their multiple stores and significantly higher staff numbers.

Invest in gold - starting small

For UAE investors wanting to build a gold portfolio, the voice and fund transfer app botim has just added a new feature. Investors can buy, sell or manage digital gold purchases through the botim app - and start the process from as low a weight as 'just 0.1 grams'.

According to industry sources, there is a vast pool of funds with UAE residents that's going into stocks through trading platforms. Now, part of those funds are going into buying digital gold.

"Many of these new UAE-based investors are still getting the feel of trading platforms," said an analyst. "But they instinctively know that putting money into gold is risk-proofing their investments.

"If of the many who use the botim app for calls or remittances some start investing in fractional gold ownership, that's still sizable."