UAE gold rates to spike further on pre-Diwali buying rush
Buyers are starting to flock to the stores and this is pushing prices higher
Dubai: Gold jewellery demand in the UAE is forecast to pick up further as the Diwali festival draws closer and buyers would do well not to wait for the prices to go skidding again over the next several days.
There are expectations of a gold buying rush from the Indian expatriate community in the country, and one major retailer said the price of 24-karat gold could reclaim the peak rate of Dh150 per gram due to higher consumer uptake.
As of 9:23am, 24K was retailing at Dh148.75 per gram, already Dh4.75 per gram more expensive compared to the price in the beginning of the month.
That means a 20-gram 24K gold necklace bought today is about Dh95 costlier than last October 1. And it could get pricier over the next several days.
Spot gold has been inching up recently after falling for quite some time, and on October 15, it hit its highest level since July 26 at $1,233.26 an ounce, according to Reuters. On Monday, the precious metal was trading at $1,228.15 an ounce at 8:24am.
According to Karim Merchant, CEO and managing director of Pure Gold Group, the upcoming Diwali festival has added lustre to the jewellery trade.
He noted that gold fans in the UAE are already flocking to the stores ahead of the festival of lights, while retailers are also stocking up on gold in anticipation of higher demand in the build-up to Diwali.
“Consumers are rushing to purchase before any further increase. There are also Diwali offers from many jewelers, which makes it a great time to buy gold and diamond jewellery,” Merchant told Gulf News.
“Spot price of gold has also increased as jewellers buy to meet increasing demand ahead of Diwali which many consumers from the Indian subcontinent consider to be an auspicious time to buy jewellery.”
With the high demand, Merchant said, the price of 24K could increase further. “Gold prices should be in the range of Dh145 to Dh150 for 24K during the upcoming season.”
“We need to keep an eye on factors, such as strength of the US dollar, Federal Reserve rates and physical demand for gold jewellery during the festive period,” he added.
The seasonal rush to buy gold is good news for the UAE jewellery trade, especially since the overall uptake of the yellow metal in the Middle East and India had weakened earlier, particularly in the first half of the year.
During the second quarter, approximately 510.3 tonnes of gold jewellery were sold worldwide, down 2 per cent compared to the 519.4 tonnes recorded in the same period last year, and this is partly due to weaker demand from India and the Middle East.
“Indian consumers were confronted with a high local gold price and seasonal challenges. Economic factors, and a new VAT regime in some markets hit Middle Eastern demand,” the World Gold Council reported in August 2018.
Higher gold uptake during Diwali is most likely to offset the recent slowdown in demand, but prices won’t work in favour of the buyers.
“Demand is expected to surge with the major Indian festival of Diwali only a few weeks away. Traditionally, gold has always rallied ahead of Diwali, as India is the second-largest consumer of gold. Rural areas of India are likely to witness a rising demand, as the Indian government had raised the minimum support price for agricultural crops recently,” added Vijay Valecha of Century Financial.
“On the charts, gold has broken out of a daily consolidation pattern to the upside and 24K gold price is expected to touch Dh149.50 [this week].”