As gold prices in the UAE, some budget-conscious shoppers are cashing in by selling old jewellery, while others are delaying new purchases.

Jewellers in Dubai said there was a small “reduction in the volume of ” as some shoppers shifted to smaller ornaments and gold coins as an investment in uncertain times. However, gold maintains its strong appeal as a safe-haven asset among Dubai and UAE shoppers, with sales being "stable".

Gold prices plunged below Dh400 per gram in Dubai on Wednesday morning after hitting a as the global price fell below $3,400 per ounce.

The 24K variant of the yellow metal was trading at Dh399.5 per gram at the opening of the markets on Wednesday, down from Dh420 yesterday. The precious metal lost all the gains it achieved on Tuesday.

After gaining nearly Dh20 per gram on Monday-Tuesday, gold fell over Dh20 per gram on Tuesday-Wednesday. Similarly, 22K fell to Dh370.0, 21K to Dh354.75 and 18K to Dh304.0 per gram. Globally, gold was trading at $3,322.44 per ounce, down 2.5 per cent, on Wednesday morning after briefly touching $3,500 per ounce on Tuesday.

"While the higher prices may have led to a slight reduction in the volume of gold jewellery purchases, it has not been significant enough to cause a drastic drop. However, we are seeing a shift in buying behaviour, with customers and smaller pieces, as well as exploring options like gold coins and smaller investment pieces," said Joy Alukkas, chairman of Joyalukkas Group.

He noted that they have seen an increase in customers selling their old gold jewellery, particularly those looking to benefit from the high prices.

"Many are exchanging their old pieces for newer designs, while others are using it as an opportunity to before prices potentially rise further."

Joy Alukkas

Shamlal Ahamed, managing director for international operations, at Malabar Gold and Diamonds, said while a “small slowdown” in purchases can be expected amongst price-conscious consumers, such dips are typically short-lived as consumers adapt to the new price range. “Notably, there has been no significant rise in gold exchange transactions, indicating that customers are holding onto their gold assets — a strong sign of their trust in its lasting worth and stability."

Shamlal Ahamed

Ahamed said despite gold prices reaching record highs, customer sentiment has remained resilient. "Demand continues to be steady, highlighting the deep-rooted belief in gold's enduring value and its role as a secure and value appreciating investment.”

Despite the high gold prices, Joy Alukkas added, sales have been “stable” across all of their showrooms. "Some shoppers are cautious and hesitant, many are still purchasing gold as they view it as a stable, long-term investment.”

He revealed that some shoppers are “still buying for special occasions, celebrations or as a part of their long-term wealth preservation strategy.”

“We continue to see positive trends in sales, thanks to our attractive offers and innovative designs that meet the current market demand,” added Alukkas.