UAE Gold Jewellery Demand Crashes as War Shakes Buyers

UAE Jewellery News: Gold jewellery sales across the UAE have plunged to their weakest level in nearly six years as escalating regional tensions and military conflict rattled consumer confidence and disrupted tourism flows throughout the Gulf.

Fresh data released by the World Gold Council showed that jewellery demand in the UAE dropped sharply by 40 per cent during the first quarter of 2026. Total demand fell to just 4.7 tonnes between January and March, compared to 7.9 tonnes during the same period last year.

The sharp downturn followed the outbreak of war involving the United States, Israel and Iran on February 28, which triggered uncertainty across regional markets and caused a visible slowdown in consumer spending. In the midst of growing concerns over the future of the regional economy, this UAE Jewellery News report notes that March witnessed some of the weakest jewellery buying activity seen in the Emirates since the height of the Covid-19 crisis.

Industry analysts said Dubai’s gold markets were particularly affected because international tourists make up a major portion of precious metal and jewellery buyers in the emirate. With fewer travellers arriving in the UAE amid security concerns and ongoing military developments, luxury spending suffered almost immediately.

The latest figures show that the current slowdown is the most severe since the second quarter of 2020, when pandemic-related travel restrictions caused gold jewellery demand to collapse to 3.8 tonnes.

Investors Turn to Gold Bars and Coins

While jewellery sales weakened dramatically, demand for gold as an investment surged across the UAE.

Consumers increasingly shifted their focus toward gold coins and bars, which recorded a strong 27 per cent increase year-on-year during the first quarter. Demand rose to 4.0 tonnes, up from 3.1 tonnes during the same period in 2025.

Market observers believe residents are moving away from luxury gold purchases and instead treating precious metals as safe-haven assets amid fears of prolonged geopolitical instability and inflationary pressure.

Gold prices have remained elevated despite recent volatility. On Sunday, global gold prices closed at $4,715.6 per ounce, marking a slight increase of 0.34 per cent. In Dubai, 24K gold closed at Dh568.25 per gram, while 22K gold stood at Dh526.25 per gram.

Global Jewellery Market Also Weakens

The UAE’s slowdown reflects a broader global trend. According to the World Gold Council, worldwide jewellery demand volumes declined by 23 per cent year-on-year as consumers across several regions struggled with rising prices and economic uncertainty.

Although total spending on jewellery remains relatively resilient due to higher gold prices, actual purchase volumes continue to weaken. Analysts warn that persistent geopolitical instability may continue suppressing demand for luxury gold products throughout 2026.

Gold Prices Face Fresh Pressure

Despite reaching record highs earlier this year, gold prices have recently shown signs of weakening as investors react to concerns surrounding inflation and possible market instability caused by the Middle East conflict.

Financial experts believe the precious metal could face additional downward pressure if military tensions escalate further.

Simon-Peter Massabni, head of business development at xs.com, warned that gold remains vulnerable to sharp reversals due to continuing geopolitical risks and fading liquidity flows into physical gold investments and exchange-traded funds.

He also noted that despite US President Donald Trump’s announcement to halt Project Freedom, concerns over the Strait of Hormuz and wider regional instability continue to fuel fears of renewed escalation.

The UAE’s gold market now finds itself caught between two opposing forces: declining luxury demand and rising investor anxiety. While consumers are cutting back on jewellery purchases, many are still turning to gold itself as a financial shelter during uncertain times. The coming months are expected to determine whether the Emirates’ gold sector can recover or whether regional instability will continue reshaping buying habits across one of the world’s most important gold trading hubs.

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