Will the upcoming festive season restore gold's shine in UAE?

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Dubai - The recent plunge in global equities renewed appetite for safe-haven asset classes.

By Muhammad Riaz Usman

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Published: Sat 27 Oct 2018, 9:00 PM

Last updated: Fri 3 Feb 2023, 10:13 AM

After a subdued first half of the year, UAE jewellery retailers are optimistic that upcoming festive season will witness a significant rise in jewellery sales. They are confident that the fast approaching Diwali, also known as festival of lights, will trigger a momentum in gold sales.

They said that the recent downward spiral of global stocks has renewed investors' appetite for safe-haven asset classes and the trend will ultimately reflect in the jewellery sales.


Gold prices rose nearly 1 per cent to a more than three-month peak on Friday as investors rushed to the safety of the bullion. Spot gold was at $1,237.51 (Dh4,541) per ounce having earlier risen to $1,243.32 (Dh4,562), its highest since mid-July. In Dubai, 24 karat gold was Dh149.50 per gramme on Saturday.

"The rise in gold price indicates its strength as an investment. The global turmoil in equity stock prices will also contribute to rise in gold prices as gold is seen as safe haven. With Indian festivities round the corner there would be buying from Indian diaspora as well," said T.S. Kalyanaraman, chairman and managing director, Kalyan Jewellers.


"The wedding season is also coming up so there will be a definite demand for wedding jewellery as well," he added.

According to World Gold Council figures, UAE gold jewellery demand in the second quarter fell 24 per cent to 8.8 tonnes from 11.7 tonnes for the same quarter last year. UAE demand, meanwhile, in the first half fell more than 25 per cent to 18.9 tonnes from 25.3 tonnes for the same period last year. Similarly, gold demand fell 8 per cent in India during the April-June quarter.

Traditionaly, jewellery sales in the UAE are always higher during September-March due to festivals such as Diwali, Christmas and the Dubai Shopping Festival.

For Indians, buying gold at Diwali is considered auspicious and thought to bring good fortune and prosperity.

"Buying gold during Diwali is a tradition that dates back to centuries. We are expecting a surge in sales this year as Diwali is considered an auspicious period for wealth and prosperity. Generally, people tend to save money to purchase gold during Diwali, and we expect this festive season to be a good one," Joy Alukkas, chairman and MD, Joyalukkas Group, said.

Karim Merchant, Group CEO & MD, Pure Gold Group, said that gold's status as safe haven has not eroded nor has its demand during traditional festivals like upcoming Diwali and occasions like marriage.

"Customers take a wait and watch approach when gold prices rises suddenly. However, gradually the market adjusts to it. When gold prices rise, we see an increase in demand for light-weight gold jewellery," Merchant said.

Abdul Salam K.P., group executive director, Malabar Group, expects a higher footfall at Malabar Gold & Diamonds' stores this season.

"The fact is that the gold price is still going good for the customers. Slight variations often happen but presently, the overall trend is positive for buying gold. We expecting our sales to rise substantially," he said.

Retailers go all out to attract customers

With expectations of a surge in jewellery sales, leading UAE jewellers have announced a variety of promotions and offers at their outlets on the occasion of Diwali.

They said that the larger Indian diaspora in the UAE generally plans purchases for the festive season and waits for promotions and offers.

"We generally understand the pulse of the customers and tailor many exciting offers for this period. This year we are giving them a chance to win gold bars, zero per cent exchange on old jewellery, cashback vouchers and many such tempting offers to generate footfalls to our showrooms," Joy Alukkas, chairman and managing director of Joyalukkas Group, said.

Along with the festive season, Malabar Gold and Diamonds is also celebrating its 25th anniversary.

"This festive season, our customers have chances of winning up to 250,000 gold coins from our stores globally. We have made our offer grander than ever since we are celebrating our 25th anniversary along with this Diwali. And so, we are expecting a higher footfall at our stores this season," said Abdul Salam K.P., group executive director of Malabar Group.

Karim Merchant, group chief executive officer and managing director of Pure Gold Group, said: "We have curated a very special Diwali collection in gold and diamond jewellery in addition to guaranteeing low prices on 22 karat gold jewellery labour charges with exceptional offers on our diamond jewellery range."

Kalyan Jewellers says that it has a host of consumer-centric offers.

"This includes the 500 gold coins offer, Samsung Pay that offers purchase related discounts until October 31 and special tie-ups with Air Arabia, Etihad Airways and Jet Airways that allows consumers to gain purchase related miles until November 15," T.S. Kalyanaraman, chairman and managing director of Kalyan Jewellers, said.

- riaz@khaleejtimes.com


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