The chance meeting in the Basque Spanish coastal town of Hondarribia ended in a sober mood as Gracia learned he had been sacked by Watford mid-conversation.
"It's amazing," Emery remarked.
"We met each other last week in my town, in Hondarribia, when I was there with my family. I was walking and in front us was Javi Gracia. At first we started speaking about our match and we finished it knowing he was sacked."
Emery is confident Gracia will soon start a 12th coaching role since 2004.
"Javi is a very good coach, as he showed last year in Watford," Emery added. "The club made their decision and I have to respect that. He is going to work again and he is going to continue his career like he is - like a great coach."