Why is Gold Cheap in Dubai?
Do you know about the City of Gold? Yes, we are talking about Dubai here, where millions of visitors come every year to shop, especially for gold and diamond jewellery. Whether the world-famous Dubai gold market or other shopping malls, you get thousands of gold jewellery shops. The UAE’s gold souqs are known for their premium quality and unique design variety. This precious metal is generally sold in three categories: 22K, 21K and 18K. However, you get to buy gold bars in 24K purity. Gold sales reach the sky during the wedding and festival seasons as residents and tourists of nearby South Asian regions come to Dubai for much-needed gold jewellery shopping.
So, what makes Dubai gold so cheap that tourists and businesses alike are attracted to it? Let’s explore the multiple reasons for cheap Dubai gold, such as tax exemption, exquisite craftsmanship and competitive pricing.
1. Tax-Free Environment
Dubai is famous for its tax-free environment. Initially, gold buying in Dubai was cheaper than in other countries because the UAE didn’t charge VAT (Value Added Tax) on gold, making it relatively more affordable. This was true until the UAE government changed it to a VAT of 5% on any purchased items from the start of 2018. Despite this VAT imposition, Dubai’s gold prices remain competitive, especially when compared to regions where taxation on luxury goods is higher. You can also claim VAT refunds as a tourist in the UAE for all purchases made in the country.
Other countries charge a hefty import duty and taxes on everything you buy compared to Dubai. So, Dubai’s tax-free policy plays a huge part in keeping gold prices low, inducing tourists and visitors to buy from Dubai’s top gold jewellers and shops.
2. Negotiable Making Charges
When you pay a gold jewellery’s price, the jewellers add making charges to this amount. With so many gold shops in Dubai, you can bargain making charges for gold to get a decent deal on your purchases. The amount varies from gold piece to piece, depending on the ornament size and the fine detailing required in the jewellery design.
3. High Trade Volume Market
Dubai’s gold market is of high volume, whether selling or buying. Businesses and tourists alike get highly competitive pricing due to high trade volumes. Gold price in Dubai has always been lower as buyers would only pay for the value of the gold jewellery. You get a high demand for gold and low prices. This is because many tourists who wish to buy gold from Dubai come from countries where gold is way more expensive. Low taxes and making charges create affordable prices, attracting more customers and increasing the gold jewellery demand. This high demand then keeps the sellers on their toes, ensuring they keep their prices attractive. You get a perfect circle of constant gold demand and affordable Dubai gold prices.
4. Low Operational Costs
Low operational costs in Dubai result in cheaper gold than other countries globally. You get cheaper labour and lower rent in Dubai than in other Western countries. For example, countries like South Africa, China, and Australia are prominent in producing this yellow metal, but their labour costs and other mining expenses can be high. Low labour cost reduces the expenses incurred by the gold merchants, allowing them to offer competitive prices.
5. Nearness to Gold-producing Countries
UAE is the middleman for gold and other precious metals from nearby regions. Dubai particularly sits in the middle of massive trade routes. Dubai’s strategic location close to gold-producing nations means fewer transportation costs. This results in lower gold prices in Dubai when sourced from neighbouring countries and regions.
6. Strong UAE Currency (Dirham)
It might surprise you, but a strong United Arab Emirates Dirham is another reason that keeps gold affordable in Dubai. It is a stable currency that doesn’t go up and down wildly due to any influence on the gold market. Since gold is usually traded in US dollars globally, a strong local currency can mean lower prices when you convert the dollar. So, gold prices can seem relatively cheaper for international buyers when the local currency is mighty against the US dollar. This is happening in Dubai, where the strong Dirham keeps gold prices competitive, especially compared to countries with weaker currencies. Plus, a strong Dirham is like a magnet for international buyers and investors who want a reliable currency for their purchases.
In Conclusion
Dubai gold is indeed cheap, and it is not just a myth. Businesses and people go to Dubai to buy affordable, high-quality gold jewellery and bullion per their needs. An excellent jeweller can help you find the perfect gold jewellery of great craftsmanship at low prices and even design customized gold ornaments. Al Romaizan Gold & Jewellery has got your back as your go-to trusted gold jewellery expert in the UAE and Dubai. Their intricate gold jewellery designs and competitive prices stand them apart as a leading Dubai gold jeweller. Al Romaizan Gold & Jewellery also have multiple global branches to facilitate their clients worldwide in getting the best gold jewellery masterpieces and collection items.
