Eid al-Fitr 2025: Record gold prices trigger shift in UAE consumer preferences toward 18K gold

Vijay Valecha, Middle East Economy, March 27, 2025

Major Islamic holidays like Eid al-Fitr traditionally result in the busiest and most lucrative days for gold purchases in the UAE’s retail sector. However, with gold prices reaching record levels this year, retailers are indicating a shift in consumer preferences towards 18K gold and lighter, more affordable options.

Gold has continued its significant rise this year, surging past the $3000 per ounce mark and giving investors about a 15 percent return. In the UAE, gold prices have seen an increase of about AED8-10 per gram this month.

Gold prices to rise surrounding Eid al-Fitr

Gold holds deep cultural significance for Middle Eastern and Arabic societies, with demand for the precious metal often spiking during festive and religious holidays like Eid, impacting its price in local markets.

“Eid gifting remains a core element of this celebration. It is anticipated that more than 50 percent of UAE residents are willing to spend more on Eid gifts, driven by emotional and financial factors,” stated Vijay Valecha, CIO at Century Financial.

The average spend on Eid jewelry gifting ranges between AED1000 and AED1800, with 18K pendants, earrings and bracelets dominating purchases, compared to 24K or 22K gold.

Looking at the historical movement of gold prices during this period, March has been one of the most bullish months in the past 4 years. Gold has gained about 4.2 percent on average in March, with about a 75 percent hit ratio. Looking at April, the commodity has gained about 1.27 percent on average, with a hit ratio of about 75 percent. “Hence, we can say that the trend around Eid al-Fitr is positive for gold,” Valecha added.

Valecha added that local shoppers are adopting a wait-and-watch approach, delaying their purchases in anticipation that prices will come down. Meanwhile, tourists tend not to hold back on purchases, making the most out of their short stays in the “City of Gold”.

UAE residents increasingly seek luxury gifting

As the festive season approaches, about 90 percent of UAE residents plan to give gifts in 2025, sticking to traditional elements of Eid celebrations. A survey by Toluna and MetrixLab pointed to luxury gifting rising, with about 29 percent of respondents specifically opting for gold and diamond jewellery, up from 27 percent previously.

Every year, major festivals like Eid Al Fitr and Akshaya Trithiya contribute to an uptick in demand for gold jewelry. “In a bid to keep up the demand, major gold shops are offering compelling promotions – including discounts on making charges, raffles, and free gold coins on purchases above a given threshold – to entice buyers. Some relief for local buyers during surging gold prices could be the slight drop in prices of about AED4 per gram from peak levels achieved a few days ago,” added Valecha.

For the year ahead, the trajectory of gold prices remains bullish, driven by tariff uncertainties, geopolitical tensions and rising inflation expectations. This economic uncertainty is pushing investors toward gold as a reliable store of value. Robust investment demand, evident by ETF inflows and continued central bank buying in a bid to reduce U.S. dollar dependence, has raised price targets for gold above $3200 by the end of the year.

Spending to surge during Eid-Al-Fitr 2024

Eid-Al-Fitr also marks a time of increased spending, travel and tourism in the Middle East region as consumers plan to allocate more of their budgets to socialising, dining out, entertainment and staycations, which reflects a renewed focus on premium experiences during the holiday benefiting the economy and overall markets.

“Enthusiasm for shopping and leisure activities during Eid Al Fitr is expected to increase, with 46 percent expecting to spend more than they did in 2024. Shopping malls continue to be a major attraction, with 78 percent of residents planning to go to malls for retail purposes and 72 percent for entertainment, reflecting growing consumer demand for Eid experiences beyond shopping,” added Valecha.

The survey also revealed that gifting remains a core part of Eid celebrations, with a notable rise in self-gifting to 42 percent from 39 percent last year as consumers indulge in personalised treats and luxury purchases. Notably, 52 percent of UAE residents are considering staycations as part of their Eid plans. These trends are expected to benefit the consumer discretionary and hospitality industries in the coming months.

Source

Middle East Economy