UAE shoppers are not letting high gold prices stop their Dhanteras, Diwali buying

Dubai: There is a near Dh31 a gram difference between the UAE gold rate between this year’s ‘Dhanteras’ – the Indian festival that’s celebrated today – and what it was last year.

Even then, it will not be a deterrent for shoppers to buy some jewellery – and if not that, VAT-free gold bars – today or by November 12, which is Diwali, the other festival where gold is a favourite choice for shoppers.

All this while gold continues to be above $1,950 an ounce, and with the UAE gold rate for 22K at Dh219.5 a gram. (Last year, for Dhanteras, 22K was at Dh188.75 a gram, and that was one of the lowest points gold had been in these two years.)

“High gold prices have been hurting demand all through the year – but when Diwali and Dhanteras come around, Indian shoppers must have their new jewellery,” said Joy Alukkas, Chairman and Managing Director of the jewellery retail group that bears his name. “It’s a life-long habit.

Gold retailer sources say that their outlets are fairly busy today, and even tourist buyers – especially travellers from India - are turning up in sizeable numbers. Part of it could be to buy for Dhanteras/Diwali, and another reason is that gold prices have softened in the past 10 days, retreating from levels of Dh223.75 a gram for 22K.

“Shoppers would have been hoping for more drops before the weekend – but it has not affected demand,” said a retailer. “We expect this to continue until Sunday close of business.”

Making charges drop further

To compensate for the high gold price, UAE jewellers are pushing lower making charges during the week. Messages and emails are being put out about 0 per cent making charges on gold bangles and chains, and a 30 per cent cut on all other 22K jewellery.

And this one will definitely resonate with shoppers – 0 per cent reduction on any gold exchanges done by the shopper.

According to Alukkas, “Making charges had already come down significantly, there’s not much more scope for UAE jewellers to slash it further. What all of us can hope is that more gold buyers will get used to these $1,900-$2,050 an ounce levels as being the new normal.

Advance booking

The one thing many buyers did for their festival gold shopping was to book early. Which is what they did in the first week of October, when gold was down to $1,820 levels. “Those shoppers who opted for price lock in are coming to the stores today and this weekend to make the actual buy,” said a gold retailer. “They had put up 5-10 per cent as down payment to ensure the price was locked in (around Dh205 a gram), and the rest will be paid now.

“Either way, Diwali and Dhanteras mean a win for gold buyers and us retailers. The only difference is that the actual shopping was split between first week October and now.”

As long as shoppers are there, no jeweller is minding that.