Diacritics in Bibliography using xelatex and biber

Question

I use XeLaTeX to compile my documents. Now, I want to typeset diacritics both in the main document text and the bibliography. The problem is that LaTeX simply leaves out every character with a diacritic in the bibliography. Below, you find a minimal example of my problem.

Any help appreciated!

\documentclass{scrartcl}
\usepackage[utf8]{inputenc}
\usepackage[german]{babel}
\usepackage[authordate,backend=biber]{biblatex-chicago}
\bibliography{Literature}
\begin{document}
S\={a}\d{m}khya \autocite{bibentry}. 
\printbibliography
\end{document}

My Literature.bib:

@incollection{bibentry,
author = {Keith Boone},
editor = {Milton Malone {\"{u}}{\"{a}}},
title = {S{\={a}}{\d{m}}khya},
year = {2020}
}