Gold prices surpassed $4,000 per ounce for the first time earlier this month, reaching $4,164, marking a more than 50% increase compared to last year. This milestone comes just ahead of the Diwali festival, creating a unique situation for the large Indian community in the UAE, where buying gold during the festival is a deeply rooted tradition.
Gold price impact
This year’s Diwali coincides with record gold prices, driven by global factors such as geopolitical tensions, trade conflicts, and currency fluctuations. Central banks worldwide have increased their gold reserves, viewing it as a stable asset during uncertain economic times.
Farhan Badami of eToro noted, “Gold is the ultimate safe haven when nothing else feels stable and tends to appreciate in the long term.” This explains why many families continue to invest in gold despite the high cost.
Changing buying patterns
Jewellers in Dubai report steady demand during the festival season, but consumer behaviour is shifting. Many buyers are opting for smaller gold coins, lighter jewellery, or spreading purchases throughout the year rather than making large single transactions. Some Indian residents are using rupee-linked bank accounts to manage costs, taking advantage of currency differences.
Dubai’s gold market role
Dubai remains a preferred location for gold purchases due to its VAT benefits, purity standards, and wide variety compared to India. The Gold Souk in Dubai often reflects global demand trends for gold, especially during Diwali.
The ongoing Diwali celebrations from October 17 to 26 include retail promotions and shopping vouchers worth Dhs150,000, aimed at supporting the market despite the high prices.
This year’s trend shows that while gold prices are high, demand remains strong. Buyers are adjusting their strategies, balancing tradition with financial caution. The significance of the festival is maintained, even if budgets are tighter.
tanvir@dubainewsweek.com
