Diwali gold buying ends in losses: UAE shoppers lose thousands of dirhams as prices fall
Gold and jewellery buyers who bought at peak rates during the Diwali festival this week, have quickly watched the value of their purchases erode.
The metal’s prices fell steeply after the festival, incurring the buyers in the UAE losses of thousands of dirhams, analysts and jewellers said on Sunday. However, the fall comes as a shock to residents who buy gold and jewellery to keep as a long-term investment.
“Gold prices in 24-karat in Dubai has been spiking to record levels of Dh525.25 as of October 21, supported by festive buying demand in the UAE as well as global safe-haven flows,” said Vijay Valecha, chief investment officer at Century Financial. However, he added that “prices crashed to Dh485 per gram by the evening of the same day, a decline of almost Dh30 per gram. 22-karat gold prices also fell from Dh486 per gram to Dh458 per gram, a fall of about Dh28 per gram. The steep drop in domestic prices is a trickle effect of international prices, where the decline is the sharpest on a one-day basis since 2013,” he said.
“As a result of this, those who bought gold at peak prices would have witnessed the erosion in value of their gold holdings over a very short span of time. To put some numbers in place hypothetically, if a buyer bought 10 grams of 24-karat gold at peak prices, he or she would have registered an unrealised loss of about Dh300. Those who bought 100 grams worth of gold at peak prices would have seen their holdings decline in value by a much higher amount of Dh3,000,” Valecha said.
Gold prices plunged further to Dh484 per gram on October 22, extending losses to a new level in a matter of days. On Thursday morning (Oct 23), 24K, 22K, 21K and 18K were trading at Dh496.5, Dh459.75, Dh440.75 and Dh377.75 per gram respectively.
Veteran UAE resident Vinita Hirani, who purchased gold during Diwali, told Emaratalyoum that “It’s demand and supply, with the current scenario so much going on in the geopolitical climate, I would rather park my cash in an asset like gold because it has a long-term stability value compared to Bitcoin or any other asset.”
Speaking about the decline in prices, Varun Bafna, co-founder of Amari Capital, said, “This pullback was largely triggered by heavy profit-booking globally after weeks of record highs driven by festive buying and safe-haven demand.”
Anuraag Sinha, managing director at Liali Jewellery, said that “If a shopper bought 10 grams at the peak price during Diwali, it cost him Dh5,250. Now, the same would cost Dh4,950.”
“For a typical purchase, buyers could be facing hundreds of dirhams in ‘paper’ losses per 10 grams, excluding other costs like making charges, premiums or design value,” said Sinha.
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