Full purchase price and buyback terms determine how far the metal must rise to break even
Dubai: Gold prices can rise and you can still lose money when selling your jewellery. For UAE residents and tourists buying with future resale in mind, making charges can absorb a substantial part of any gain.
The reason is straightforward: your purchase bill covers both the gold and the work involved in producing the ornament. When selling, you should not assume the buyer will reimburse that craftsmanship.
A wedding necklace or a gift has value beyond what it might fetch later. If you also expect it to preserve your savings, the question is how far gold must rise before you can recover the amount you paid.
For plain gold jewellery priced by weight, the bill generally combines the gold component, making charges and applicable VAT. Pieces containing stones or other materials need a separate breakdown because their total weight is not necessarily their gold weight.
Several gold retailers publish retail gold jewellery prices, with its centrally controlled shop displays updated three times daily to reflect international bullion-market movements. The displayed rate provides a reference, but it does not tell you the final cost of an ornament.
Making charges may appear as an amount per gram, a percentage of the gold component or a flat fee. Ask how the retailer calculates the charge before comparing quotations.
A percentage-based charge increases in dirham terms when the gold rate rises, even if the piece’s weight and the percentage remain unchanged. A fixed per-gram charge does not automatically increase with the metal price.
Consider an illustrative 20-gram, 22K necklace with a quoted gold component of Dh5,785. This is a calculation example, not a current gold-price quotation.
A 20% making charge adds Dh1,157, taking the subtotal to Dh6,942. With 5% VAT of Dh347.10, the final bill reaches Dh7,289.10. For an ordinary consumer jewellery purchase from a VAT-registered retailer, VAT generally applies to the taxable selling price, including making charges.
If you later received only the original Dh5,785 gold component, you would lose Dh1,504.10—approximately 20.6% of your purchase price. That assumes an unchanged gold rate and no buyer deduction.
To recover the full bill, the gold component would need to rise by 26%, provided the buyer paid its full future value without deductions. Even a 10% increase would leave you Dh925.60 short of what you originally spent.
Lower making charges reduce that gap. With a 5% charge, the same gold component would produce a total bill of Dh6,377.96 after VAT, requiring a 10.25% rise to break even under the same assumptions.
These figures illustrate the effect of purchase costs. They do not predict gold prices or guarantee resale proceeds.
A promise of “full gold value” may refer to exchange credit towards another purchase rather than cash. Published UAE retailer terms distinguish between the two and can exclude original making charges and taxes from later exchange valuations, while applying a separate deduction for cash buyback.
Ask what the shop would pay if you sold the piece outright and what it would credit against a replacement. An exchange may also mean paying fresh making charges and applicable VAT on the new ornament.
Get the policy in writing and keep your invoice. Confirm how the buyer assesses weight and purity, whether it applies deductions, and which conditions cover stone-set or fixed-price jewellery.
Negotiating making charges can help where the retailer permits it. Focus on the final fee rather than the advertised discount: a 50% reduction on Dh1,000 still leaves Dh500 payable, more than a comparable piece carrying a Dh400 charge without a promotion.
Compare similar weights, purities and designs. Ask each shop to show the net gold weight, rate applied, making charge, any stone charges and final bill.
If your main aim is investment rather than wearing jewellery, compare bars and investment coins too. They carry premiums and potential storage or insurance costs, so ask for both the purchase price and the current buyback quotation for the exact product.
For a jewellery buyer, that same comparison is useful before paying. Knowing what you could recover helps you judge how much you are spending on the gold—and how much on a design you want to wear.
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