UAE gold prices saw a slight increase on Monday, as global bullion markets experienced volatility following China’s decision to remove a key tax rebate that had previously supported retail demand. Retail prices for 24-karat gold in the UAE rose to Dh482.25 per gram, up from Dh481 on Friday. The price of the popular 22-karat gold variant climbed to Dh446.50, an increase from Dh445.25. Traders attributed this moderate rise to steady local demand and the delayed impact of global price fluctuations affecting the domestic market.
On the international front, gold prices dropped below $4,000 per ounce after China removed a long-standing rebate that allowed many retailers to offset value-added tax (VAT) on gold purchased from the Shanghai Gold Exchange and Shanghai Futures Exchange. This policy shift weakens the financial advantage for firms that sell directly to consumers or process gold into jewellery, a sector that has played a key role in driving physical demand this year.
Gold for immediate delivery fell by as much as 1%, before recovering some of the losses. Chinese jewellery stocks also took a hit, reflecting the market’s reaction. Under the new rules, which will remain in place until the end of 2027, only exchange members selling investment-grade gold will retain the full VAT offset. For non-members, including those producing non-investment gold such as jewellery or industrial products, the offset has been reduced from 13% to 6%. This change applies to non-members who buy directly from the exchanges as well.
The decision follows a period of significant price hikes in October, driven by strong demand from retail investors, central banks, and a surge in safe-haven flows. Although gold prices have seen a correction over the past two weeks, they are still up more than 50% year-to-date. Analysts believe that many of the factors that drove the price surge are still in place, but China’s new tax policies are likely to temper speculative and consumer demand, particularly in one of the world’s largest jewellery markets.
Locally, UAE traders noted that demand continues to track with festival season buying cycles and long-term investment patterns, rather than short-term price fluctuations. Many jewellers are still optimistic, expecting central bank demand and ongoing global economic uncertainty to support gold prices in the long run.
While price-sensitive buyers may prefer smaller, lighter pieces, those looking to save over the long term may take advantage of any pullbacks. The premium on physical gold in key Asian markets, particularly China, will be closely monitored, given the country’s influence on price levels through sustained demand.
