Looking for gold in Dubai is like looking for saltwater in the middle of the Atlantic, there's plenty to be had.There is a lot of competition there because there is a large concentration of gold dealers. (All the worlds big banks and dealers are represented.) There are so many dealers there because it is the jumping off point for smugglers on boats trying to evade precious metals controls in India. They can operate openly in Dubai because what they are doing does not violate Dubai law and the government there doesn't care about Indian laws.
Is gold really cheaper in Dubai and Why?
In order to understand this, it is important to understand what constitutes price of gold you buy:
Price of the gold ornament is = Price of 22K/18K gold * ( Weight in Grams + Wastage charges) + ( Making Charges) + VAT
Price of Gold
The prices of gold metal are fairly standard throughout the world. The below table compares the prices of gold as of 29 April 2013.
Source: Sify finance, Khaleej Times, gold price network
As seen in the above table, the prices of gold are more or less similar across countries.
This depends upon the intricacy of design you choose. This includes the weight of gold that is wasted/lost during the design/crafting process. This wastage charge is more common with branded jewlery providers than local jewelers.
Making charges is another component added by jewelers to compensate for the workmanship effort put by them. This essentially is their profit margin. In India, making charges vary from INR 50 to INR 1500 per gram. In Dubai, the charges range from AED10 per gram to AED 500 per gram. Making charges are usually higher on 18K jewlery since more contemporary designs are available in 18k gold. If you are buying from local jewelers, be ready to bargain on this.
The other factor that affects the price of gold is the VAT or value added tax applied on gold. Until 2000, there were different tax structure applicable on gold across Europe ranging from 17.5% to 0% making the market very unbalanced. Therefore in the year 2000, the VAT on gold was declared as exempt throughout the EU. In India, some states apply a 2% VAT on gold in ornament form. In Dubai, there is no tax on the sale of gold
Hence overall, looking at the price of gold, making charges and tax free structure of Dubai, gold is definitely cheaper here.
2. Where to buy gold from?
As discussed above, the price of gold remains standard throughout different providers in Dubai. However if you willing to haggle on the making charges, it would be a good idea to visit the Gold Souk. It has good choice of designs and price ranges. However, if you compared it to some of the big branded jewellery stores, they might not have very updated designs, and barring a few stores, the designs are a copy of each other.
Another advantage of visiting the gold souk is you get to see the World’s heaviest gold ring (Najmat Taiba, the world’s largest gold ring has a 5.17kg precious stone and weighs 58.7kg in gold) and lots of bling.
3. Bargain or not to bargain?
Yes, yes. Bargain your heart out, but now you know what you need to bargain on! Just ask for the making charges and thrash the margin out of it. However, if you have put on your best shoes and gone to a fancy shancy place, you might want to keep your negotiation limited.
4. Location of Gold Souk, and how to get there
The gold souk in Dubai is based in Deira. Since the area is popular, the taxi guys should be able to take you there. In case you are travelling by Metro, you can take the take the red line till Union metro station, switch to green line and go till Palm Diera metro station. It is walking distance from both. Get out of the station and get into the bylanes.
5. Cash or Card
If you are buying gold from gold souk, it is definitely better to carry cash (or you can withdraw cash after you like something). Although cards are accepted, it makes a big difference while bargaining, if you are paying in cash. Both dollars and Dirhams are accepted.
6. Taking it back home
I can tell you, if you are traveling back to India. In case of gold bullion, 7% duty (6% import duty and 1% VAT) on the gold value will have to be paid by you at the customs. However, for gold carried in the form of ornaments, there is an exemption on duties for NRIs. As part of the latest budget 2013-14, male passengers can carry gold worth INR 50,000, and female passengers INR100,000 duty free as compared to the earlier limit of INR 10,000 and INR 20,000, respectively. However, this is applicable only for NRIs living abroad for more than one year or those who are transferring their residence to India. This means that if you are here only for the shopping festival, you might have to use your skills and wallet to get through customs. If you are traveling to another country, it is better to check the local customs rules.