Gold and jewellery buyers who purchased at peak rates during Diwali this week have quickly seen the value of their investments drop.

A sharp fall in gold prices after the festival led to losses of thousands of dirhams for UAE buyers, according to analysts and jewellers. Despite this short-term loss, residents emphasise that their purchases are intended as long-term investments.

Vijay Valecha, chief investment officer at Century Financial, said prices of 24-karat gold in Dubai had risen to a record high of Dh525.25 on October 21, supported by festive demand and global safe-haven flows.

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“However, prices crashed to Dh485 per gram by evening, marking a decline of nearly Dh30 per gram. Similarly, 22-karat gold also fell from Dh486 per gram to Dh458 per gram, declining by about Dh28 per gram. This drop in prices was a trickle effect of the decline in international prices, which was the steepest one-day drop since 2013,” he said.

Photo: Vijay Valecha

"As a result, those who bought gold at peak prices would have suffered an erosion in the value of their holdings over a very short span of time. To quantify the potential loss hypothetically, if a buyer purchased 10 grams of 24-karat gold at peak prices, they would have incurred an unrealised loss of about Dh300. Meanwhile, those who bought 100 grams worth of gold at peak prices would have seen their holdings decline in value by a much higher Dh3,000,” Valecha said.

Most recently, gold prices dropped further on October 22 to Dh484 per gram, pushing losses even higher within a couple 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.

Vinita Hirani, a long-time UAE resident, who bought gold during Diwali, said, "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."

Photo: Vinita Hirani

Talking about the drop 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."

Photo: Varun Bafna

Anuraag Sinha, managing director at Liali Jewellery, said, “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.

Photo: Anuraag Sinha

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