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

Eid al-Fitr and other important Islamic holidays have historically been the busiest and most profitable periods for the retail gold sector in the UAE. However, with gold prices reaching record highs this year, retailers report that consumer preferences are shifting towards 18K gold and lighter, more affordable options. This shift reflects consumers' increased price sensitivity in their gold purchasing decisions, demonstrating a practical approach to celebrating traditions.

Gold prices have continued to rise this year, surpassing the $3,000 per ounce mark, providing investors with returns of approximately 15%. In the UAE, gold prices have increased by about 8-10 dirhams per gram this month. Gold holds deep cultural significance in Middle Eastern and Arab societies, and demand typically surges during festivals and religious holidays like Eid al-Fitr, impacting prices in the local market, thus requiring close monitoring by consumers and investors alike.

Vijay Valecha, Chief Investment Officer at Century Financial, stated: "Eid gifts remain central to the celebrations. Over 50% of UAE residents are expected to spend more on Eid gifts, driven by both emotional and economic factors." The average spending on Eid jewelry gifts ranges from 1,000 dirhams to 1,800 dirhams, with 18K pendants, earrings, and bracelets dominating over 24K or 22K gold, highlighting a preference for value and design over pure gold content.

Reviewing the historical trends of gold prices during the same period over the past four years, March has consistently been one of the strongest performing months. Gold has risen by an average of about 4.2% in March, with an upward probability of approximately 75%. In April, gold has risen by an average of about 1.27%, with an upward probability of approximately 75%. Valecha added, "Therefore, we can say that the trend for gold during Eid is positive," suggesting a favorable outlook for gold investments during this festive period.

Valecha added that local shoppers are adopting a wait-and-see approach, postponing purchases in anticipation of price drops. Meanwhile, tourists tend not to curb their buying, taking full advantage of their brief stay in the "City of Gold." A survey by Toluna and MetrixLab indicates that approximately 90% of UAE residents plan to give gifts in 2025 as the festival approaches, upholding the traditional elements of Eid al-Fitr celebrations. Luxury gifts are on the rise, with approximately 29% of respondents specifically choosing gold and diamond jewelry, up from 27% previously, indicating a growing desire for high-end presents.

Every year, major festivals such as Eid al-Fitr and Akshaya Trithiya boost demand for gold jewelry. Valecha added, "To sustain demand, major gold stores are offering attractive promotions – including discounts on making charges, raffle draws, and free gold coins on purchases above a certain threshold – to entice buyers. A slight dip in gold prices for local buyers, falling by about 4 dirhams per gram from the peak levels reached a few days ago, may provide some relief," creating a more appealing buying environment.

Looking ahead to the coming year, tariff uncertainties, geopolitical tensions, and rising inflation expectations will drive gold prices to maintain an upward trajectory. This economic uncertainty is prompting investors to view gold as a reliable store of value. Strong investment demand, evidenced by ETF inflows and continued central bank purchases to reduce reliance on the dollar, has raised the price target for gold to over $3,200 by the end of the year, showcasing its resilience and appeal in volatile markets.

Eid al-Fitr also marks an increase in consumer, travel, and tourism spending in the Middle East, as consumers plan to allocate larger budgets to socializing, dining out, entertainment, and staycations, reflecting a renewed focus on premium experiences during the festive period, which benefits the economy and overall market. Valecha added, "An increase in enthusiasm for shopping and leisure activities is expected during Eid, with 46% expecting to spend more than in 2024. Malls remain a major attraction, with 78% of residents planning to visit malls for retail shopping and 72% planning to visit malls for entertainment, reflecting the growing consumer demand for Eid experiences beyond just shopping," contributing to the vibrancy of the local economy.

The survey also revealed that gifting remains a core part of Eid al-Fitr celebrations, with self-gifting rising significantly from 39% last year to 42%, as consumers indulge in personalized treats and luxury purchases. Notably, 52% of UAE residents are considering staycations as part of their Eid plans. These trends are expected to benefit consumer discretionary spending and the hospitality sector in the coming months, fostering growth and economic activity.