Gold jewellery demand in UAE surged 57% in 2021 due to high tourist traffic

The Middle East gold jewellery market had a bumper year in 2021, with demand across major countries posting double-digit growth and recovering the losses in 2020, according to the latest data from the World Gold Council. 

Jewellery demand in the region reached a total of 159.9 tonnes for the full year, up by 41 percent compared to 2020. The growth was led by the UAE market, where total demand jumped 57 percent to 33.8 tonnes, thanks to higher tourist traffic and improved consumer sentiment. 

“Continued improvement in tourist numbers, especially from India, aided this growth, while the relatively effective containment of COVID-19 generated a positive mood that helped local demand,” the report said. 

Saudi Arabia was the second-biggest performer during the year, with jewellery demand reaching 33.3 tonnes, up by 47 percent compared to the previous year. Egypt came third, with demand totalling 27.9 tonnes, up by 42 percent, followed by Iran with 26.3 tonnes and Kuwait with 13 tonnes. 

Global statistics 

Global jewellery consumption also rebounded to pre-pandemic levels, posting a 52 percent increase in 2021 and fully recovering the losses sustained during 2020. 

Overall, gold demand across the world reached 4,021 tonnes in 2021, supported by the surge in consumption during the fourth quarter, when demand reached 1,147 tonnes, the highest quarterly level since the second quarter of 2019 and an increase of nearly 50 percent year-on-year. 

Demand for gold bars and coins climbed 31 percent to an eight-year high of 1,180 tonnes, driven by retail investors seeking a safe haven against rising inflation and economic uncertainty caused by the coronavirus pandemic. 

However, gold-backed ETFs recorded outflows of 173 tonnes during the year. This was partly due to tactical investors reducing hedges early in the year amid COVID-19 vaccine rollouts. Rising interest rates also made holding gold more expensive for investors. 

But the World Gold Council noted that the outflows represent only a fraction of the 2,200 tonnes that gold ETFs have accumulated over the preceding five years. This, the council said, demonstrates that investors continue to consider gold as an important part of their portfolio. 

Courtesy: ZAWYA