Global ETFs attracted a record $31 billion (Dh114 billion) in Q3, but designers say shoppers still favour physical gold.
Dubai: Global gold ETFs attracted a record $31 billion (Dh114 billion) in the third quarter, but jewellery designers say Indian families in the UAE are still expected to favour physical gold purchases for Dhanteras. While demand for ETFs is clearly surging, designers argue that these investment products appeal to a different type of buyer.
The World Gold Council (WGC) reported that physically backed gold funds, or ETFs, recorded inflows of $10 billion (Dh36.7 billion) in September alone. Holdings increased by 67 tonnes to a record 4,256 tonnes. However, assets under management fell 7 per cent to $574 billion (Dh2.11 trillion), reflecting a decline in gold prices during the month.
Gold’s performance this year has been far from steady. Prices climbed 14 per cent in January before recording their sharpest monthly decline in nearly 13 years in March. June saw prices fall by more than 11 per cent, bringing gold to around $4,000 an ounce (Dh14,690). August then delivered a 13 per cent recovery, taking prices to $4,386.
ETF investment flows followed these price movements. Holdings reached a peak of 4,176 tonnes on February 27 before declining. Outflows were recorded in May and June, while July brought a turnaround, with $3 billion in fresh inflows. August added another $18 billion. By the end of August, year-to-date inflows had reached $29 billion.
Are Indians turning to ETFs?
A similar trend emerged in India, where investors have traditionally preferred physical gold. Indian gold funds attracted $496.2 million (Dh1.82 billion) in September, taking inflows for 2026 so far to $4.71 billion (Dh17.3 billion). This placed India third globally, behind the UK and China.
Interestingly, India’s investment demand increased 54 per cent year on year in the first quarter, while jewellery demand by weight declined 19 per cent, according to WGC figures. Wedding-related purchases, however, remained resilient through the summer.
Amreen Iqbal
Designers highlight the difference
Amreen Iqbal, founder of Piece of You Jewellery, believes physical gold remains the preferred choice for Dhanteras. “The ritual, the blessing and the act of receiving a tangible piece cannot be replicated on a screen,” she says. While some customers invest in both, she points out that the two options serve different purposes.
“Our customers are not buying a price exposure,” Iqbal notes. “They are buying a milestone, a gift or a piece of family history.” She says personalised jewellery offers something that investment funds cannot. “A name in gold or a child’s initials in diamonds is not something an app can deliver.”
Panagiotis Melekkis
Panos Melekkis, the Cypriot founder of Panos Melekkis Jewellery, draws a distinction between gold as an investment and gold as an adornment. ETFs and digital gold are suitable for people seeking financial exposure to the metal, he explains, but they cannot replace jewellery bought for weddings or family occasions.
“You cannot wear an ETF to your wedding, give digital gold as a beautiful piece of jewellery to your daughter, or pass it down through generations as a treasured family heirloom,” Melekkis argues. Dhanteras and Diwali, he adds, represent traditions and aspirations for prosperity that go beyond gold’s market value. “I don’t see digital gold as a direct competitor to fine jewellery.”
Rasha Mansour
Designer Rasha Mansour acknowledges the strength of the investment figures but cautions against interpreting them as a shift away from physical jewellery. “I would not interpret this as the end of physical jewellery,” she says. Festival purchases, she adds, remain closely tied to prosperity, family traditions and continuity across generations.
For Mansour, the opportunity for jewellery brands lies in the emotional value they offer rather than the metal alone. “An investment product can track gold; it cannot replace the personal significance of a piece of jewellery chosen to mark a moment or carry a story.”
Dhanteras falls on November 6 this year. Designers believe that even buyers who invest in gold ETFs will continue to seek pieces they can hold, wear and pass on as gifts. Lower prices compared with last year could also encourage shoppers to diversify their portfolios while feeling more comfortable spending on physical gold.
