Will UAE’s Indian expats shop for gold today, on ‘Akshaya Trithiya’?

Will Indian expats in the UAE and across the Gulf go for tradition and buy gold on ‘Akshaya Trithiya’? They are not getting any help from gold prices, with Friday showing the metal making more gains. Image Credit: Gulf News Archive

Dubai: Gold shoppers in the UAE and elsewhere will not be getting a favourable price break for today’s ‘Akshaya Trithiya’, the Indian festival where buying gold on the day is believed to bring good fortune for the rest of the 12 months.

Gold prices was under some pressure over the last two days, but were heading back up early Friday (May 14). It is currently at $1,824 an ounce level, while the Dubai Gold Rate will start from around Dh207.25 a gram. (It was at Dh206.5 early Thursday and Dh208.25 on Wednesday evening.)

Clearly, any hope that prices could slip even by a dirham or two are dashed by the way gold is performing in the global metals market Friday. Even then, shoppers and UAE jewellery retailers are bracing for what could be the worst Akshaya Trithiya sales ever.

“Demand for buying on festival day is down 50-60 per cent from what it was last year – and in 2020, shoppers and the trade had to contend with the COVID-19 created lockdown measures,” said the head of a leading jewellery house in Dubai. “This drop in demand is not about gold prices alone – it’s the sentiment over what’s happening with COVID-19 situation in India.

“The appetite is just not there.” The lowest Dubai Gold Rate this year has been the Dh191.25 on March 31.

Dh221.25a gram

The Dubai Gold Rate on January 6, 2021… and the highest to date this year

A few bookings

Gold retailer sources confirm that a few shoppers did book their orders in advance so that they could come and pick it up on May 14. But even here, such order placements have been on the lower side. (By placing an order, the shopper gets the benefit of a locked-in price should gold climb higher subsequently. If prices drop, then they can have the lower price.)

Some shoppers could yet be heading for the stores later today and make token purchases. Again, that will not go anywhere near what jewellery retailers would have hoped from one of the key dates in their calendar.

Major brands are offering some of the biggest discounts, offering anywhere up to 20 per cent off on making charges and in some cases even going beyond that to sell “at cost”. Malabar Gold & Diamonds and Joyalukkas are adding gold coins if the purchase value reaches a certain level.

Gold’s mighty run

While the COVID-19 situation plays out in India, Pakistan and other key gold consuming South Asian nations, shoppers here will not be able to overlook the price of gold either.

While last year’s Akshaya Trithiya – marked on April 26 – had the Dubai Gold Rate at Dh203.98 a gram, in 2019, on May 7, it was at Dh152. (Each year, Akshaya Trithiya falls on different days in April or May.)

“The biggest compulsion for anyone to buy gold is that this is the one asset that’s done well in the last 12 months – and this continues,” said a shopper in Dubai who is planning to spend around Dh10,000 today. “In this period, gold has been up by more than $100 in ounce terms – as an asset, it’s right up there. So, today’s buying is hoping things will get better.”

But fresh beginnings and hopes for a good 12 months this Akshaya Trithiya could be far removed from a majority of shoppers’ minds.