UAE: Gold prices drop; jewellery shoppers opt for 'lock-in' ahead of festivals

Some of the jewellers report more than 200% increase in booking before Dhantera festival as shoppers enjoy rate protection with lock-in option

Waheed Abbas

Published: Tue 17 Oct 2023, 6:00 AM

Last updated: Tue 17 Oct 2023, 8:23 PM

Many UAE gold and jewellery shoppers opted for the “lock-in” option ahead of the Dhantera and Diwali festivals with some of the jewellers reporting a 200 per cent increase as compared to last year.

Consumers were also attracted by the drop in precious metal prices recently when rates hit seven-month lows. However, the prices have recovered as investors rush to safe-haven commodity after the Middle East conflict.

The Indian festivals of Dhantera and Diwali will be marked in the second week of November. Buying precious metal and jewellery during Dhantera festival is considered auspicious by Indians.

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When shoppers opt for ‘lock-in’, they pay roughly a certain amount – usually 10 per cent – in advance and block the gold rate. If the gold price increases, they can purchase at the blocked rate. If it falls below the blocked rate, they can draw mileage from the lower rate. It is this assured benefit that is motivating customers to increasingly opt for gold rate protection.

Ramesh Kalyanaraman, executive director of Kalyan Jewellers, said: “Yes, there was an increase in shoppers choosing ‘lock-in’ option on the back of the festive demand momentum.

“The gold rate ‘lock-in’ festive offers is almost like an annual ritual that our patrons always look forward to,” he said.

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“We witnessed an uptick of such services being availed of during the pre-Diwali and pre-Dhanteras phase, which are considered among one of the most auspicious occasions to purchase gold. Similarly, the occasion of Akshaya Tritiya, which is observed around April or May, is another such popular occasion, when people opt to make jewellery purchases,” he added.

The precious metal prices hit a seven-month low of $1,825 per ounce in the first week of October due to strong demand for the dollar and higher bond yields. It climbed to $1,932 on Friday due to the Middle East conflict.

200% increase in ‘lock-in’ option

John Paul Alukkas, managing director, Joyalukkas Group, also confirmed that there was an increase in shoppers choosing 'lock-in' options in the UAE, with a noticeable percentage rise.

He added that the customers in the UAE have a proactive approach to leverage favourable pricing conditions.