Diwali gold buying: UAE shoppers and tourists ready for some splurging this year

Over the next few days, Indian expats in the UAE will be indulging in some heavy shopping sprees to mark the festival of Diwali, which is on November 4. Amidst all that spending on dresses and dining out, will gold, diamonds and jewellery get some serious attention this year?

The jewellers have already brought some eye-catching promotions, timed to resonate with any possible buying plans for Diwali. Gold prices remain stuck around Dh204/Dh205 for one gram of 22K, marking a second straight year of Dh200 plus during Diwali.

Jewellery exchange offers remain the most viable option for shoppers wanting to get the best deal under the circumstances. Just these numbers will convince them – anyone selling or exchanging 1 ounce of gold (28 grams) that was bought five years ago is already up by about Dh2,000. Not bad in the grand scheme of things.

UAE’s gold shoppers always have the option of booking a purchase when rates are low and then pay the rest of it during the actual purchase. “This makes sense only the rates are volatile – for instance, if the Dubai Gold Rate drops to, say, Dh195 a gram or so from the current levels,” said a retailer. “But there has been hardly any volatility in recent days.”

There was some hope that the local rate could drop to about Dh190-Dh193 by Diwali after bullion prices took a bit of decline recently. But that did not last beyond a day or two and gold was soon heading back to plus $1,800 an ounce level.

Today (October 29), international prices have slipped to $1,795. “There are no indications that gold will come under any sort of pressure,” said an analyst. “These relative minor changes will not be reflected all that much at retail level prices.”

But this Diwali – and the rest of November - will offer a lot of positives for UAE’s gold business. That’s because the tourists are returning – and jewellery retailers will take a lot of heart from the resumption of full international services between UAE and India from November.

“Even if we don’t get the full demand from Indian tourists before or on November 4, we have the remaining seven weeks to capitalise,” said one of the biggest jewellers at Deira Gold Souq. “With the return of tourists, it’s only a question of when they show up at gold shops.”

The retailer's got a point – jewellery offtake in the relatively quieter July to end September phase itself saw the UAE offtake touching 8 tonnes. A comeback is very much on the cards for UAE gold.

For the moment, all that everyone’s thinking is about celebrating Diwali on November 4. If the Dubai Gold Rate could slip by a few dirhams by then, the gold and jewellery business will have one more reason to celebrate.