Now would be a good time to be thinking of buying gold. The current drop places gold at a 7-month low. Image Credit: Virendra Saklani/Gulf News

Dubai: Gold shoppers in the UAE have an early chance to lock in prices ahead of November’s Diwali buying spree, with bullion dropping to $1,875 an ounce – and more important, its lowest point since March.

In UAE gold rate terms, there could be a further dip from yesterday’s closing rate of Dh211.5 a gram for 22K. (It was Dh217.75 on September 20.)

This morning, the UAE gold rate dropped further, Dh210.25. 

The mere fact that gold is at a 7-month low could prompt shoppers to consider their options – if not buy now, at least book and lock in the price for later. All through the recent past, gold had been stuck at or above the $1,900 levels, eating into shopper demand for the metal.

It’s expected that all of the major gold and jewellery retailers will once again push aggressively on the price lock-in mechanism to convince shoppers they will get their money’s worth. “This price drop is coming at possibly the right moment,” said a jeweller. “This could indeed bring forward the ‘Dhanteras’ (on November 10) and Diwali (November 12) demand.” (The Indian festivals represent one of the peak buying phases for gold and jewellery in the UAE.)

No one is betting that gold prices could drop further. All through the last 3 years, each time there was a dip that started to attract buyer attention, it was followed by increases, typically well above the $1,900 mark.

A price lock-in done today, for instance, would mean the buyer would get the Dh211 a gram on his purchase made within the next 30 days (even more). Even if gold prices were to rise during the period.

International gold prices had been going weak in recent days and had dropped below $1,900 yesterday. There are indications it could pull lower to $1,850 and below, but as said before, shoppers’ hopes have been crushed in the past when it comes to such expectations.

Overseas buyers will help

Even if the advance bookings for Diwali doesn’t happen at anticipated levels, UAE gold buying demand could get help from another quarter – visitors and tourists who are already in town or flying in for the weekend.

“Tourist buying is always price-sensitive when it comes to gold,” said the retailer. “For them, $1,874 – and Dh211 a gram – would be just right to pick up more. Already, the Dubai market is seeing a growing number of overseas visitor arrivals for the upcoming exhibitions and conferences.

“All that we need is for gold to hold at these levels or drop in the next 48 hours, and then we are set for the weekend.”

Gold was at $1,629

Ideally, anyone buying or booking gold now should be looking at the recent past for price trends. If they were to look to last October, they will find prices were around the $1,629 an ounce levels.

That phase didn't last for long - and by January 13, 2023, it was at $1,920.

The window for gold buying at the right price is extremely narrow in the current times...