STOCK Dubai gold shopping
Time for a bit of shine - Tourist buying has lit up UAE's gold and jewellery sector in the last few weeks and setting up a strong Diwali. Image Credit: Ahmed Ramzan/Gulf News

Dubai: Gold shoppers in the UAE are looking at a second straight year of spending around Dh205 a gram on 22K gold for their ‘Diwali’ shopping next week, as bullion prices continue to hover around $1,800 an ounce. In recent weeks, there were hopes among shoppers and retailers that gold prices will lose some of that fizz to drop to around Dh190/Dh191 a gram, which would have been more helpful for shoppers cautious about their every dirham.

But retailers say that after nearly two years of seeing their favourite metal in the plus Dh200 a gram range, shoppers are getting used to those levels. More residents are increasing their frequency of purchases to keep adding to their gold and jewellery stocks in the belief that this is one asset that stands the test of time.

The Dubai Gold Rate early Thursday (October 28) was Dh205.25 a gram. Market watchers now expect these rates to prevail in the week to November 4, which is when the Indian festival of Diwali is celebrated. (Last year, Diwali was on November 14.)

In its latest global market update, World Gold Council confirms the increased spending – “Demand in the UAE more than doubled from Q3-20, to reach 8 tonnes – {and} improving tourist arrivals (especially from India) aided the recovery.”

In the third quarter, gold averaged $1,790 an ounce, down from Q3-2020’s all-time dollar high - but still above its 3-year, 5-year and 10-year averages.

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The ‘return’

The return of tourists and visitors is the biggest break UAE’s gold and jewellery retailers are getting this Diwali, unlike last year when they were wholly dependent on domestic shoppers for the buying. Anil Dhanak, Managing Director of Kanz Jewels, is ecstatic about this Diwali: “We are seeing a huge number of visitors this year due to the Expo 2020 despite the expensive flight tickets and higher gold prices. The Expo has definitely boosted tourism in the UAE and we expect these visitors to make good purchases as always.” (Tourists to the UAE will have a 5 per cent VAT refund on their purchases.)

That will be more than enough to set up a busier than usual November for the gold trade. In the year to date, each time the Dubai Gold Rate has dropped below Dh200, there has been a relative rush of buying activity. But as retailers point out, shoppers are getting used to Dh200 and above as part of the new normal. Plus, there is a ‘silver lining too’.

Dh217.25

Highest point for the Dubai Gold Rate in the year-to-date

“With gold we need to look at the broader picture and realize that prices of gold this year have in fact dropped from its high of $2,000 an ounce at the end of 2020,” said Dhanak. “Demand has already picked up as we get closer to the Diwali season. As regardless of the increase in gold prices this month, a lot of our customers are eager to go out and spend as normalcy has kicked in.”

That’s the 22K point – normalcy. Of economies on the mend, of tourists returning, and of gold prices at Dh200.

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Anil Dhanak of Kanz jewels: "As regardless of the increase in gold prices this month, a lot of our customers are eager to go out and spend as normalcy has kicked in." Image Credit: Virendra Saklani/Gulf News