Global gold demand slowed to a six-year low in the second quarter of the year, and is set to fall further after China’s repeated devaluations of its currency, according to analysts.
Demand for gold fell by 12 per cent between April and June, as buyers demanded 914.9 tonnes of the precious metal, according to a quarterly report from the World Gold Council (WGC). That was driven by a 14 per cent fall in demand for jewellery, which is the single largest purchasing category for the metal.
In the UAE, demand for jewellery slid by 22 per cent, following reduced spending by tourists and Ramadan falling in June, according to the WGC.
Gold prices have slid to $1,116, down from about $1,300 earlier in the year. They are currently at an eight-week high, following a trough of about $1,090 last month – but analysts expect that slowing growth and currency moves in China could further dent the metal.
“The sentiment in gold … has been turning increasingly negative during the past month,” wrote Ole Hansen, the head of commodity strategy at Saxo Bank, in a research note. “No signs of inflation combined with rising bond yields, collapsing emerging market currencies, no safe-haven demand, a rising dollar, and rising expectations of an early US rate hike have all helped trigger an exodus out of gold.”
Analysts expect a further 2 per cent drop in global gold prices, as demand from China slows. The People’s Bank of China (PBoC), the country’s central bank, devalued the yuan by 3.5 per cent over the past few days. That pushes up the local price of gold in China, reducing consumer appetites for the metal.
This follows a PBoC announcement that it had added 604 tonnes of gold to its reserves in June this year.
“China has already become the world’s largest gold producer, and is also a big consumer of gold, with an ongoing policy of encouraging gold ownership by private individuals,” the PBoC said last week.
Slowing Chinese growth figures are also putting downward pressure on the demand for gold. While official data shows the country’s economy growing at 7 per cent, informal indicators paint a much less optimistic picture. Power generation, car sales, steel and cement output have all decreased considerably over the past year, suggesting a slowdown bigger than that described by official figures.
Analysts said that the financial woes of Greece and China had not led to an influx into gold, as often happens in times of turbulence.
“There are limited signs of safe-haven demand for gold,” wrote the Barclays commodities analyst Suki Cooper in a research note. “Since September 2014, gold has underperformed other haven assets, such as bunds and US Treasuries.”
abouyamourn@thenational.ae
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The specs
- Engine: 3.9-litre twin-turbo V8
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- On sale: 2026
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The schedule
December 5 - 23: Shooting competition, Al Dhafra Shooting Club
December 9 - 24: Handicrafts competition, from 4pm until 10pm, Heritage Souq
December 11 - 20: Dates competition, from 4pm
December 12 - 20: Sour milk competition
December 13: Falcon beauty competition
December 14 and 20: Saluki races
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McIlroy's struggles in 2016/17
European Tour: 6 events, 16 rounds, 5 cuts, 0 wins, 3 top-10s, 4 top-25s, 72,5567 points, ranked 16th
PGA Tour: 8 events, 26 rounds, 6 cuts, 0 wins, 4 top-10s, 5 top-25s, 526 points, ranked 71st
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
