Source Credit: Gulf News
Dubai: Selling gold at zero making charges in the UAE could have long-term negative consequences for the industry, despite the short-term boost in sales, according to officials at the Dubai Gold & Jewellery Group.
Gold prices have surged past $2,900 an ounce, with the UAE gold rate for 22K at Dh327.75 per gram just shy of the record Dh331.25 reached on February 24. As gold prices continue to rise, consumers are increasingly scrutinizing making charges, prompting retailers to offer steep discounts and special promotions to encourage purchases.
While UAE jewelers have been offering reduced making charges, the recent emergence of 0% making charges at certain stores has sparked concerns within the industry.
The practice, observed primarily among small, single-store retailers in Dubai Gold Souq, is not part of official promotional campaigns, which require regulatory approval. Instead, these retailers are consistently selling jewelry at gold’s market value without adding labor or craftsmanship costs.
Abdul Salam K.P., Board Member of Dubai Gold & Jewellery Group and Vice-Chairman of Malabar Gold & Diamonds, highlighted the risks of this pricing strategy: “Going for zero making charges is not practically possible, as there is a cost for any ornament in the form of labor and gold loss during the making process. If some retailers are offering no making charge, they are likely clearing outdated jewelry designs.”
Industry experts warn that selling jewelry purely at gold weight price without making charges could devalue craftsmanship, impact artisans' livelihoods, and disrupt the market's sustainability.
Arjun Dhanak, Director of Kanz Jewels, emphasized the importance of fair pricing: “Yes, some UAE jewelers are offering 0% making charges, but true artistry and quality come at a cost. Skilled artisans, who are the backbone of this industry, deserve fair compensation. Sustainable pricing ensures both quality for the customer and respect for those who create these beautiful pieces.”
A bullion trader cautioned that while consumers may be tempted by lower prices, retailers operating without a margin face significant financial risks.“Even if a jeweler has lower overhead costs than a branded retailer, selling at cost price is not a sustainable business model,” he said.
A Dubai Gold & Jewellery Group official also warned that shoppers are receiving the wrong message about the industry’s pricing structure: “No business can survive without a margin. Every gold retailer bears the same costs when purchasing raw gold. If they sell at the same price they bought for, how will they sustain their business?
Despite rising gold prices, most UAE jewelers continue to offer reasonable discounts on making charges rather than eliminating them entirely. The industry emphasizes the importance of maintaining a balance between competitive pricing and sustaining the craftsmanship that defines gold jewelry.
As the UAE gold market remains highly competitive, industry leaders urge consumers to be cautious about offers that appear too good to be true, ensuring they prioritize both quality and fair pricing when making gold purchases.
