As interest rates decline and inflation continues to rise, some residents of the UAE and other GCC countries are increasingly moving their cash into gold, viewing the precious metal as a safer and more rewarding investment.

Jewellers and traders in the UAE report a growing trend of people converting their savings into gold, driven by concerns that inflation will erode the value of their cash holdings. With gold prices continuing to rally, many believe the yellow metal offers a better hedge against economic uncertainty.

“Gold prices are climbing, and people see it as a safe and liquid investment,” said Mohammed Dhaiban, Marketing Director at Al Romaizan.

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“Rather than keeping their savings in cash, which could lose value, they prefer to invest in gold and jewellery. Many believe prices will go even higher–some economists are predicting it could reach $5,000 an ounce. That’s why people feel it’s better to buy gold now than to miss out later. People are purchasing gold bars, wearable craft pieces, and other gold items both for use and investment.”

Mohammed Dhaiban

Pavel Spirin, CEO of Scope Markets, echoed this sentiment, noting that gold remains in high demand across the UAE and the region. “People are shifting their cash into gold and exploring other online investment opportunities,” he said.

Pavel Spirin

Gold prices surged to a record $3,949 per ounce on Monday, gaining more than 1.5 per cent in the evening trading session. In the UAE, local gold rates also reached new highs, with 24K gold priced at Dh475.25 per gram and 22K at Dh440 per gram.

This surge comes amid a broader trend of falling interest rates in the UAE and other Gulf countries, following the US Federal Reserve’s recent rate cut. Analysts expect at least two more rate cuts this year, which could further reduce returns on bank deposits and drive more investors toward alternative assets like gold.

“With global inflation on the rise, people no longer want to hold cash in the bank. They understand it’s losing value, so they prefer gold, which is highly liquid,” Dhaiban told Khaleej Times.

He noted that most shoppers are purchasing practical gold jewellery they can use, rather than expensive or high-value items.

“Some people are buying gold bars to sell later, but most prefer items they can wear daily – products that serve both aesthetic and investment purposes,” he added.

Tamjid Abdullah, Deputy Group CEO of Jawhara Jewellery, observed that buying preferences differ by nationality. “Arab shoppers typically prefer jewellery with 60-70 per cent pure gold and 30-40 per cent diamond content. In contrast, the Asian community favours pieces with 90 per cent gold and minimal diamonds or precious stones,” he explained.

Ahmad Enezan, Vice CEO of Salem Al Shueibi Jewellery, noted a shift in consumer awareness: “Previously, people weren’t very concerned about gold prices; they were more interested in getting new jewellery designs. Now, they're paying close attention to rates.”

Ahmad Enezan

He added that while gold prices used to rise around 5-7 per cent annually, recent years have seen increases of over 30 per cent, especially since the Covid-19 pandemic.

“People now realise they can recover the making charges and other costs associated with gold jewellery over time, as prices continue to rise,” Enezan said.