Source: Bayut
Despite the sharp lowering of gold import duties by India in 2024, the UAE still keeps its charm for buyers, typically Indian tourists, by offering cheaper gold. After a brief narrowing of the price gap in April, the experts say that this was a rare and temporary anomaly.
The price gap temporarily narrowed to 4% in April 2025, owing to short-term gyrations of the market rather than any shock fundamental alteration of pricing dynamics. One of the principal reasons for this sharp up-tick in price was the lowering of premiums on deliveries to the jewellery retailers in India.
“Yes, there was a phase in April when UAE-India gold price gap was 4% – but that happened because of some issues in the Indian market temporarily,” said Shamlal Ahmed, Managing Director of Malabar Gold & Diamonds. “It had nothing to do with the Indian rupee firming up in any way and reducing the price difference.
“After about those two weeks in April, the price between UAE and India gold has gone back to 6%.”
A Rare Moment of Price Alignment
For example, on April 22, the Indian Board Rate for a gram of 22K gold was Rs9,290. For the AED-INR exchange rate of 23.05 on that day, Indian gold would have been priced at Dh403.
On the very same day, the Dubai Gold Market was however overpriced for a short period of time at Dh388.75.
This meant that the price difference had reduced to 4% as compared to the usual 6%. In July 2024, however, India had slashed duty on gold from 15% to 6% with a focus to have a drastic effect over gold smuggling into the country.
“Yes, there was a phase in April when UAE-India gold price gap was 4% – but that happened because of some issues in the Indian market temporarily” – Shamlal Ahmed, Managing Director of Malabar Gold & Diamonds
Consumer Behavior: Volume Over Margin
However, the important price difference of up to 15% still remained for gold jewelers in UAE and GCC countries. Indian visitors or tourists to the UAE never really curtailed gold purchases because of this.
“There would be guided tours from India who would come directly to the Dubai Gold Souq,” said Ahmed. “Even though the price difference was cut from 15% to 6%, what changed was that Indian tourists ended up buying more here.”
In contrast, gold trade insiders state that a price variation of less than 5% greatly influences Indian buyers in their purchase behavior. For that reason, it was quite a surprising step when it went down to 4% last month.
Jeweler Dynamics and Market Factors
This gap results from the change in long standing price buffers where Indian jewelry traders used to pay extra cash for dramatic deliveries. “Where jewelers were used to paying premiums, they suddenly were seeing big cuts,” said Ahmed. “It was mainly because many jewellery retailers who were not hedging their gold buys were hit by margin calls. It meant there was a lot of gold availability in the Indian market at the same time.
“That explains the price difference between UAE and India narrowing rather than anything fundamental. This was a short-term change, nothing more.”
Indian tourists definitely include top gold consumers in the UAE, so the price movement in India is closely watched
“In some months, Indian tourist buying makes up 30%-40% of our sales,” said a jeweller. “The biggest reason continues to be the price difference – there was no issue when India slashed duty from 15% to 6%.
“But anything lower than that will make it difficult. We hope the April changes were temporary…”
