Dubai: Diwali, the Indian festival, could be coming early for gold shoppers in the UAE, with jewellery retailers thinking of bringing forward the promotions. This is being done as gold prices remain under pressure, with the Dubai Gold Rate at Dh197.25 a gram for 22K.
Diwali this year will be celebrated on October 22, and has traditionally been one of the high points in local gold buying. Jewellers time their Diwali promotions a couple of weeks ahead of the main day. This year, the chances are they will do so quite early.
Some of the big names are thinking of doing so from early September, and there are also those willing to start on the promotions right now. This way, even if shoppers do not buy, they will at least be booking to buy within a month or two.
“It’s rare to launch special promotions two months before the main date – but the way gold prices are behaving these are unusual times,” said Abdul Salam K. P., Vice-Chairman of Malabar Gold & Diamonds. “Allowing advance bookings ahead of Diwali -backed by promotions is something we have been discussing.”
Drop below Dh200
It was late last week that gold prices started to soften, and with the Dubai Gold Rate dropping under Dh200 a gram. It was the second time in a month that local gold rate had done so – for the better part of this year, prices had been well above Dh210.
The latest price drop immediately meant brisk weekend sales, but there were many shoppers waiting for further declines. They are likely to get it, with bullion prices at just under $1,740 an ounce. (The more than $30 drop in recent days are a result of the dollar’s strength, which has impacted all major currencies and seen the euro drop below $1.)
“Each time gold is below Dh200 a gram, UAE shoppers are responding,” said a jeweller. “This time even though many had just gotten back from their holidays and have payments for schools and all the rest of it to do this month. But average purchase sizes were lower because of the other payment commitments shoppers had.”
This is why many shoppers prefer to book at current gold rates and then pick up what they want in a month to two months. So, even if prices go higher, they still get the lower rate. And if September or October prices are lower than what they booked at, they get the lower rate. A win-win in other words.
Jewellery retailers also have another reason to bring forward promotions. “Current price levels will bring forward wedding related purchases,” said Salam. “A lot of second- or third-generation resident weddings are taking place in the UAE itself, and that’s a major sales stream for jewellery retailers here.
“Dubai is also a major destination for weddings by non-residents, and that too offers potential for high-end collections. Even here too, the latest gold price drop will help.”
"Anything under Dh200 a gram could be considered a big plus for shoppers," said Abdul Salam K. P. of Malabar Gold & Diamonds. "But a new normal would be a price in the Dh205-210 range, because medium- to longer term, gold is likely to push closer to $1,800 an ounce."