As Diwali nears, many UAE shoppers are approaching one of the holiday’s biggest spending seasons cautiously. The UAE is home to about 4.3 million Indian nationals, and for many families who celebrate, buying gold is closely tied to the five-day festival. Dhanteras, which marks the start of Diwali celebrations, is considered an “auspicious” time to buy gold, and even a small purchase around the holiday is broadly accepted as a symbol of prosperity and good fortune for the year ahead. Gold prices are emerging from a period of volatility after record-high surges at the start of the year. Experts say many Diwali shoppers may opt for lighter jewellery and stick to tighter budgets.
Then again, UAE shoppers were already buying less gold jewellery before the Diwali season began. Demand for gold jewellery in the country fell 28 per cent year-over-year in the second quarter to 5.6 tonnes, according to the World Gold Council, marking the 14th consecutive quarter of declines. Gold was swinging far more than usual. World Gold Council data shows its 30-day realised volatility briefly topped 50 per cent in the first half of the year, compared with a 20-year average of 17 per cent. The group said the war added to the volatility, along with shifts in investor positioning and the dollar.
However, gold prices rose most sharply in January, before the US-Israeli war with Iran began. While the conflict added volatility, it still moved both ways. Investors bought it as a safer asset, while inflation fears, a stronger dollar, and shifting expectations about US interest rates pushed prices back down at other times. Some investors were also taking profits after January’s record rally. By June 25, the London Bullion Market Association gold price had fallen from $5,405 an ounce in late January to about $4,002, even as the war continued. Investors raked in profits after January’s sharp rally. For shoppers, the drop is significant. At Dubai’s January peak, 10 grams of 22-karat gold would have cost about Dh6,168. At the time of reporting, the same amount cost about Dh4,605, more than Dh1,500 less.
Whether prices stay there is less clear. Nic Puckrin, a cross-asset analyst and CEO and co-founder of crypto media platform Coin Bureau, said gold is still being supported by central-bank buying, demand from Chinese investors, and money flowing into gold-backed funds. “ETF investors have been accumulating,” Puckrin said. Inflation, government debt, and geopolitical uncertainty could also keep gold prices elevated over the longer term, he added.
Buying with a budget
“It is still early days for Diwali, but the festive season has seen a strong start with the consumer being more primed to buy,” Ananthanarayanan Hariharan, CEO of Damas Jewellery, said. “The recovery is coming through on both diamonds and gold, and that is very heartening for us.”
Hariharan said many customers had held off on larger purchases when prices were at their peak, and are now returning as gold has become cheaper. But that has not meant a return to the heavier purchases of previous years. “They’re buying again, but with a clear budget in mind,” he said.
“Compared with last Diwali, we’re seeing more demand for everyday pieces that can be worn well beyond the festival, while heavier traditional sets are increasingly reserved for weddings and milestone occasions. We are also seeing an improved preference for diamonds as well as colour stones,” Hariharan said. “Customers like versatile, wearable designs, and 18K has become a firm part of festive buying alongside traditional 22K.”
Shamlal Ahamed, managing director of international operations at Malabar Gold & Diamonds, said he is seeing the same shift. “Rather than reducing purchases, consumers are becoming more discerning, with growing interest in versatile, lightweight lifestyle jewellery that offers both investment value and everyday wearability,” he said.
The same pattern is showing up more broadly. “Consumers are spending more, but higher prices mean they are getting less gold for the money spent,” said Kavita Chacko, research head for India at the World Gold Council.
Investment demand holds
Even as jewellery demand falls, buyers are not necessarily turning away from gold. Puckrin pointed to World Gold Council data showing investment demand for bars and coins rose 30 per cent year-on-year in the second quarter, even as jewellery demand fell 28 per cent.
“There’s obviously still demand for gold,” he said. “The fact that people are walking away with fewer grams is likely a sign that buyers are being priced out of owning more.”
Chacko agreed, adding that buyers interested in gold are increasingly making smaller purchases and using old-gold exchange schemes to keep costs down. “Dhanteras and festive demand tend to be more resilient than discretionary buying because purchasing gold on auspicious occasions remains culturally important,” she explained. For many buyers, keeping the tradition matters more than buying as much gold as before, she said. “They are adjusting through lighter pieces, smaller purchases, exchange offers and more investment-oriented products,” Chacko said.
John Paul Alukkas, CEO of Joyalukkas Jewellery’s international operations, backs this and said more customers are using pre-owned gold to offset the cost of a new purchase. “One of the smartest things a Diwali shopper can do right now is bring in old jewellery,” Alukkas said. “Exchange lets families refresh their collection without starting from zero, and more customers are using it each year.”
“Diwali shoppers haven’t stopped buying gold,” Alukkas said. “They’ve started buying it with a sharper pencil.”
Alukkas also points to a trend of customers pairing gold purchases with travel home. “We see families planning their jewellery shopping around their travel dates and buying in the UAE before they fly.” Compared with previous Diwali seasons, Chacko expects spending to hold up better than the amount of gold actually being bought. “Early indicators point to healthy festive demand, with improving store footfall and retailers replenishing inventories in anticipation of strong demand,” she said. “Given elevated gold prices, however, growth in value terms is expected to outpace volume growth.”
Hariharan agrees that the tradition itself is holding. “For many families, buying gold on Dhanteras is non-negotiable. It’s about blessings and prosperity for the year ahead,” he emphasised. However, “the size of the purchase may change with the price of gold, but the purchase itself almost always happens. Even a small coin or a single piece carries the same meaning.”
Companies like Damas have had to adjust Diwali offerings to changes in consumer spending. Hariharan said the jeweller expanded its range of lightweight 18K and 22K gold pieces while also offering lower price points. “Volatility this year made flexibility essential,” he said. Alukkas echoes that. “Customers come in with a budget and a plan — and our job is to help them find the best piece within it. That’s a happy kind of challenge.”
For Indians living abroad, Diwali can take on a different weight. Sreya Mitra, an associate professor at the American University of Sharjah whose research includes South Asian popular culture and diaspora, said the festival is not celebrated with the same intensity across every region or community in India. However, in diaspora communities, those regional differences can fade. “Once you go outside India, Diwali does become a marker of Indianness,” Mitra said. “It’s about roots, it’s about connecting to your culture rather than seeing it only from the religious perspective.”
Mitra pointed to how visible Diwali becomes across the UAE, from mall campaigns and jewellery collections to restaurant menus and sweets. “I think Diwali gets more of the optics because it is obviously in some ways tied to consumption,” Mitra said. “You buy sweets, you eat out.” For some families, Mitra said, those rituals are as much about staying connected to Indian culture as they are about religion.
That same idea carries into Dhanteras. The tradition does not necessarily mean making a large gold purchase. In some communities, Mitra said, the ritual is to buy metal at an auspicious time, regardless of whether it’s gold, silver, brass or copper. “Sometimes it’s also symbolic,” she said. “Even if it’s a symbolic gesture, people would want to buy.”
Prepare for elevated prices
Higher prices can also affect buyers differently depending on what they want the gold for. Mitra said buyers treating gold as an investment may still favour 22K or 24K, while shoppers looking for something to wear are more likely to compromise on karat.
“If someone wants a new piece of jewellery, they probably will not buy 22 carat, but buy the 14 or 18 carat,” she said.
Chacko expects festive demand to hold up. She said listed jewellers were already seeing spending rise faster than volumes in the June-to-September quarter.
Gold may also stay expensive. Puckrin said inflation, government debt, and geopolitical uncertainty continue to support prices, even if higher interest rates sometimes reduce them. “Consumers should prepare for prices remaining elevated in the longer term,” he said.
For Mitra, that adaptability is part of why the tradition endures. Popular culture has also helped make festivals like Diwali more visible, shaping everything from fashion and jewellery to how brands market around them. “Bollywood has played a very, very crucial role in not only celebrating existing festivals, but also sort of magnifying certain festivals,” she said. While the type and value of jewellery bought may change, the meaning attached to it is harder to shake.
“It’s more than just buying jewellery or buying a precious metal,” Mitra said. “There’s a lot of cultural connotation.”
Source: Khaleej Times