Dubai – City of Gold: A Visit to Dubai “Gold Souk”

A brief visit to Dubai this week gave us the chance to check out their famous Gold Souk or Gold Market. Like much of the east gold maintains an important role in society here. It is still a common form of saving – particularly in jewellery form much like in India, (who also happens to be Dubai’s largest customer when it comes to gold).

The scale of this attachment to gold in the East was borne out by the sheer size of the Gold Souk.

A long central semi-open air hallway is littered with over 300 gold shops lined up one after the other. You wonder how any of them make any money! Guess it shows just how much demand there is here.

Just one of 100’s of Shops in the Dubai Gold Souk.

Speaking of demand, according to a recent report $75 billion of gold, or about 40% of the worlds physical bullion exchanged, was traded through Dubai last year! Quite a staggering number for a country that doesn’t mine any gold. Of course this figure relates to trade via the Dubai Multi Commodities Centre (DMCC) not the gold street markets or Gold and Diamonds Park. Although much of the gold sold at these markets would be included in these figures as it would likely initially trade via the DMCC to arrive in Dubai. John Hathaway reported that Dubai has become one the world’s major gold trade centres over the past 10 years and he reckons it will increase its trade volumes even more yet. This growth demonstrates the “significant shift in the balance of global demand flows” – that is the shift in demand from West to East. On top of this other reasons for the massive growth in gold trade via Dubai include trade transparency, its strategic location, and a rising number of tourists. The head of Kaloti Precious Metals states that Dubai currently has around 11% of the worlds gold business – but expects this to grow to 39% in 2020 to be the largest in the world! To cater for this demand in Dubai, Kaloti Precious Metals is building what is set to be the worlds biggest gold refinery at a cost of around $60 million as outlined in this Reuters video below.

Gold Vending Machines


As mentioned already the increasing tourism in Dubai is likely one of the main reasons for the 6 gold vending machines that are now located across the city. We first noted these in Germany back in 2009. We saw 2 of these vending machines while in Dubai. One at the worlds largest mall – Dubai Mall. And one at Atlantis at The Palms – the man-made palm shaped island. From what we could see these were certainly targeting tourists as they have bars and coins with the logo of the hotel or of the Burj Khalifa – the worlds tallest building on them. Unfortunately we thought we’d taken a photo of the pricing on the vending machine so we could calculate the percentages above spot they were going for but we lost a number of photos with a problem on our phone and this was amongst them unfortunately. No doubt the more touristy bars would go for a hefty premium. None are available here in NZ yet. The nearest is just under 11,000km away in Peru though according to this gold ATM finder! And here’s an interesting pdf with details of the vending machines, what products they can offer and how they operate.

Anyway, back to the Gold Souk, after that sidetrack into gold demand in Dubai.

A short boat ride to the Gold Souk.

As already mentioned there were hundreds of shops selling gold jewellery. This was in the old town along what is referred to as “The Creek” near Dubai’s original CBD. We got there via a short boat ride across the creek, navigating amongst the many traditional looking boats arriving from Iran.

The stock in the Gold Souk is predominantly 21 carat jewellery.

Higher than you’d see in most jewellers here in NZ where 18 carat is more common. One shop we went into it was nothing but 21 carat. They have pricing boards listing the current spot prices in United Arab Emirates Dirhams (AED) for 24, 22, 21 and 18 carats. So you can work out what percentage above the spot price you are paying – well with the help of a calculator at least. Although we saw a Swiss Pamp bar sign we had trouble finding anything other than jewellery in our all too brief time at the Gold Souk.

Looking down the lane at Dubai Gold Souk. Pricing boards (like the one on the right) show gold spot prices for different karats.

The spot price boards in the market lane the day we visited were:

24k:  148.25 AED 22k:  140.75 AED 21k:   134.75 AED 18k:   116.50 AED

We got prices out of interest on a couple of items.

A fairly simple but still somewhat chunky gold bracelet was going for 3000 AED. Weighing in at 15 grams, at that days spot price this was a premium of 48% over the spot price of 2021.25 AED for 15 grams. Then a very impressive necklace set – that wouldn’t have looked out of place on Cleopatra – was going for 55,000 AED. At 240 grams by our calculations this was going for 70% above spot price. But there was serious work that went into this.

“Cleopatra” Style necklaces going for around $18,000.

If you want to compare that in NZ dollars the exchange rate from Dirhams to NZ dollars is 0.34 currently, so around NZ$18,700. Of course odds are that they could be bargained down quite a bit further given they probably identified we weren’t serious buyers. And of course the fabrication costs of jewellery mean the mark up is always pretty high. But from what we know these were likely pretty good value compared to jewellery here. There is also now a Gold and Diamond Park selling you guessed it gold, diamonds and jewellery on an even larger scale. But in our limited visit we didn’t quite make it to there. Preferring to check out the original market instead which dates back to the 1940’s. Anyway quite an experience being surrounded by just so much gold. We’d heard that there is around 10 tons of gold at the Souk at any one time! Phenomenal – just like most of Dubai, where everything is on a grand scale. However even though prices were comparatively low for gold jewellery in Dubai, we still reckon the best bet is buying 24 Carat gold (or 99.99% pure gold) to get the most bang for your buck. Rather than lower purity and higher mark up jewellery. Local NZ refined gold is all 99.99% pure as are imported coins and bars including Swiss Pamp or Canadian Maple Leaf Coins. Check out our order page for latest prices.  

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