Stock - Gold
Gold prices took a tumble late on Wednesday, and that's setting up UAE shoppers for some major decisions - should they book a sale before next month's Diwali? Image Credit: Bloomberg

Dubai: Gold prices have finally done a real favour for shoppers in the UAE and elsewhere – overnight it dropped more than $30 dollars an ounce to $1,662, and a level last seen in April 2020. (That was the time gold prices were starting on a two-year ‘golden run’ that saw bullion prices breach $2,000 levels twice.

So, should shoppers in the UAE be buying/booking today, and hope the price dip will continue through the weekend? The UAE gold rate for a gram of 22K is Dh189, the first time it has dropped below Dh190 in quite a while.

Early on Friday, the price for 22K has been set at Dh189.25. (For updates, please visit this page.) 

"Since 8pm yesterday, when the Dh189 was confirmed, shoppers were coming to stores to make use of the drop," said Abdul Salam K.P., Vice-Chairman of Malabar Gold & Diamonds. "On  bookings, most buyers are using our online portal to commit to a purchase before Diwali.

The extent of the bullion price drop did surprise everyone, shoppers and jewellery retailers alike.

- Abdul Salam K.P.

Ahead of yesterday’s closing price of Dh189, the lowest this year had been the Dh191.75 on July 21. Through the best part of these near three years, gold had been above Dh200 a gram, and with the highest being in the mid-Dh230s.

“Tourists are already picking up gold and jewellery, mostly coins and the basic chains and bangles,” said a retailer. “Today should see more of them, and, hopefully, they will start looking at pricier collections. Last evening (September 15) at the Gold Souq, it sure felt like the buzz was returning, something that was not there for more than three years.”

10 %

The price drop from December 31, 2021 when gold was at $1,830/oz. Today, it's at $1,662. Will it head lower?

What about UAE consumers?

By now, most of the big jewellery retailers are already extending booking or price lock-in offers to resident buyers. “So close to Diwali (which falls on October 22), there will always be pent up demand that will get released today. Shoppers have learnt their lessons – if they are not buying today, they will definitely be booking at today’s rate. And they will not wait until this evening to do so.”

The message is clear – do not wait around. If bullion prices can drop more than $30 an ounce in a matter of hours, the same can happen on the rebound.

What we have seen with each price drop, shoppers are making a return to gold buying. They only need convincing that they are buying at the right price. We have kept bookings open and will run a separate offer for Diwali

- Joy Alukkas, Chairman of Joyalukkas

Tourists call in

What’s also happening is that tourists planning October visits are also calling in their jewellery retailers to confirm purchases at current prices. Wedding-related orders are also coming in regularly from overseas. “A lot of the actual orders happening today (or tomorrow) will actually be realised loser to October 22,” said the retailer. “By now, regular gold shoppers realise they have to time their purchases just like they would with stock purchases.”

So, what happened to gold?

Bullion prices got caught up in the swirling worries about inflation biting into global economy’s growth chances. The hopes of a smooth progress for markets and commodities until the US Federal reserve’s next hike later next week have been dashed. Stock markets in the US and Asia have slipped in these last few hours, and gold’s been the other casualty. (Bitcoin and Ethereum too have taken hits.)

"Unless markets are surprised with an increase with inflation expectations, gold should stabilize above the $1,650 region," said Edward Moya, Senior Market Analyst at the consultancy Oanda.

That's good enough for UAE gold buyers, for now.