Gold drops $80 an ounce in hours - right time to buy or will prices crash further?
For UAE shoppers, if prices drops further, it sets them up nicely for 'Akshaya Trithiya'
Dubai: Are gold prices heading for a full-on crash?
Early today (April 23), it sure looks like it, with the safe haven asset dropping by around $80 to currently be at the $2,305 an ounce mark. This is the first proper drop gold has had in weeks, after having surged to $2,200, $2,300 and even $2,400 levels in short order.
The current $2,305 levels are still on the much higher side from a shopper perspective. But if this softness in prices continue, shoppers and jewellery retailers in the UAE will be among the first to cheer. Since the start of the 2024, gold prices had been in a headlong rush to ever higher levels, and breaching the $2,400 level was seen as evidence that this rush could continue.
The UAE gold rate had been in the Dh268 a gram for 22K range in recent days. A rate sizzling hot for shoppers to engage in. Most of the recent buying had been by tourists to the UAE, who feel the price difference between here and their home country is always worth the buying whatever the price level.
Reflecting the international bullion price drop, the UAE gold rate for early today is Dh258.5 for 22K, down from Dh262.25. It was Dh268.25 on Sunday (April 21). Click here to view past 10 days rate
It's plan and simple what's happening to gold - investors are getting into heavy profit-taking. And this opens up an opening for shoppers
Can it drop further?
Analysts had been talking about gold price correction for some time now. But today's $80 drop looks like something more than a correction. "Each time, shoppers hoped that gold would drop to more accessible levels, they have been disappointed," said a jeweller. "Even then, the hope is that gold prices will weaken further in time for May 10's Akshaya Trithiya, one of the major date in the gold retail calendar.
"More so because gold sales during this month's Eid was just a small percentage of what it has usually been in past years. Shoppers found gold prices to be way above what they were comfortable with."
All eyes on May 10
So, can Akshaya Trithiya - this year observed on May 10 - help? The festival is all about gold and jewellery buying, with Indian shoppers citing it as an auspicious day.
UAE jewellery retailers will be quick to come up with targeted promotions to help shoppers out. Making charges on jewellery have already been cut significantly in recent weeks as part of the incentive. Shoppers will also be getting price lock-in programs so that they can buy at a lower price on or around May 10.
How gold performs through the rest of the week will have a major bearing on what shoppers plan to do next. As said before, each time gold prices have shown some signs of softening, some event - geopolitics or interest rate talk - have conspired to push it back to higher levels.
If gold were to head anywhere close to $2,100 levels, that could be a major incentive for shoppers to turn up in strength. On or around May 10...