Diwali in UAE: Jewellery stores expect increase in festival sales despite 40% gold price hike

The relentless increase in gold prices have not dented jewellery sales across the UAE during October — the month of two major festivals for Indian expatriates — with most retail outlets bustling with brisk business and increased footfalls.

Despite a 40 per cent spike in gold prices during the current festive season of Dussehra and Diwali compared to 2023, traders said they expect a modest increase in sales value regardless of up to 20 per cent fall in volume.

Gold prices in the UAE hit an all-time high of Dh330.50 per gram for 24K and Dh306 for 22K with the international price of the yellow metal hitting $2731 per ounce. For 22K ornaments, preferred by most Indian expatriate jewellery buyers, the price has gone up by Dh88 per gram or 40 per cent compared to Dh218 a year ago.

Joy Alukkas, chairman of Alukkas Group, said Indians buy gold during the festival of Dussehra and Diwali because the yellow metal is considered as a symbol of wealth and prosperity.

Diwali will be celebrated on October 31 with the five-day festival beginning on October 28 and concluding on November 2.

“We are witnessing a steady stream of buyers this year despite the high price factor. While shoppers may be buying less in terms of quantity given the record high prices, they are quite upbeat, assured that their investment in gold during this time is auspicious, safe and rewarding,” Alukkas, who has a network of 163 retail outlets across the globe, said.

He said the outlook for gold is largely bullish given the increasing demand for safe-haven assets amid mounting geopolitical uncertainties and falling interest rates. “The current rally appears unrelenting and with the price breaking out to new highs and nothing notable on the calendar, gold definitely has positive momentum.”

K.P. Abdul Salam, vice-chairman of Malabar Gold and Diamonds, said jewellery buyers are not deterred by the price spike. “They are still enthusiastic and in a buying mode albeit in less quantity. For instance, those who used to buy 20 gram during the same season last year may be able to afford only 16 grams this year. Therefore, we expect up to 20 per cent drop in quantity but will close the season with a slightly higher level in value,” said Salam, whose group operates 342 outlets globally and 66 in the UAE.

Saxo Bank’s Apac Research Team said gold is setting a new record high, fuelled by global demand for safe-haven assets and anticipated further interest rate cuts from major central banks.

Analysts said after one of the strongest and steadiest price climbs of the year this past week gold on its way to fresh record-setting highs, and with domestic and international tensions supporting uncertainty, it is no surprise that market participants see nothing but skies ahead for the yellow metal.

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