UAE shoppers choosing gold bars over traditional jewelry.

In the UAE, shoppers are leaning towards

purchasing gold bars over traditional jewelry. This trend is driven by a growing interest in gold as an investment, cultural preferences for tangible assets, and the desire for a secure store of value, especially amidst economic uncertainties. The shift signifies a changing perspective on gold, emphasizing its role as a financial asset rather than just a decorative item.

UAE shoppers bought more gold coins and bullion than jewellery in 2023, meaning buyers had a stronger appetite for investment

The Emirates saw consistent year-on-year growth for coins and bars, taking annual demand to a 10-year high. Safe-haven motives kept demand elevated in the fourth quarter, although the price rise held back some investors, waiting for a correction, it said

Gold prices see-sawed in 2023, touching as low as $1,809 in February 2023 before rising to $2,038 in May. The price gain fell to $1,817in October before rising to $2,081 in December, influenced by geopolitical issues and the US Federal Reserve decision about the rate cuts.

The surge in gold bar purchases by UAE shoppers can be attributed to the appeal of a tangible and weighty investment. Gold bars are considered a reliable store of value, serving as a hedge against economic volatility and inflation. This shift in buying behavior underscores a broader recognition of gold's role as a secure and enduring asset in uncertain times, reflecting a pragmatic approach to wealth preservation.

The UAE was also among the top countries in demand for jewellery in 2023 after China, India, the US and Turkey.

“The drop in the UAE was mainly due to the high base of 2022, which had been boosted by the post-Covid return of tourism,” the World Gold Council said.

In the UAE, per capita demand for gold was 5.07 grams in 2023, down from 5.6 in the previous year

Gold exchange-traded funds (ETFs) saw a third consecutive annual outflow, losing 244 tonnes. The pace of outflows slowed markedly into year-end, but October’s hefty outflows dominated the fourth quarter.

Annual bar and coin investment saw a mild contraction of 3 per cent year-on-year as divergent trends in key Western and Eastern markets offset one another. Annual jewellery consumption remained steady at 2,093 tonnes, even in the high gold price environment. China’s recovery supported the robust global total.

Unwavering demand from central banks has been supportive of gold demand again this year and helped offset weakness in other areas of the market, keeping 2023 demand well above the ten-year moving average,” said Louise Street, senior markets analyst at the World Gold Council.

Going forward, Street said that in addition to monetary policy, geopolitical uncertainty is often a key driver of gold demand in 2024. “We expect this to have a pronounced impact on the market. Ongoing conflicts, trade tensions and over 60 elections taking place around the world are likely to encourage investors to turn to gold for its proven track record as a safe haven asset,” he said.

Investment Appeal:

 Gold bars are seen as a solid investment due to their intrinsic value, making them an attractive option for those looking to diversify their portfolios.

Tangible Asset: 

Unlike jewelry, gold bars provide a tangible and easily quantifiable form of wealth, contributing to their popularity as a secure store of value.

Cultural Significance: 

Cultural preferences in the UAE often prioritize gold as a symbol of wealth and prosperity, and buying gold bars aligns with this cultural affinity for precious metals.

Financial Security: 

In times of economic uncertainty, gold bars are perceived as a safe-haven asset, offering a sense of financial security against market fluctuations and inflation.

Long-Term Value: 

Gold has historically maintained its value over the long term, making gold bars an attractive choice for those looking for stability and preservation of wealth.

Diversification Strategy:

 Investors may be diversifying their holdings by opting for gold bars, seeking to reduce risk and enhance the resilience of their overall investment portfolio.

UAE shoppers bought more gold coins and bullion than jewellery in 2023, meaning buyers had a stronger appetite for investment.

According to World Gold Council data released on Wednesday (Jan 31), demand by UAE consumers for bars and coins jumped by 34 per cent to 11.2 tonnes last year as compared to demand for jewellery dropping by 15 per cent from 46.9 tonnes in 2022 to 39.8 tonnes in 2023. This took the total gold demand to 50.9 tonnes last year