UAE: Gold inches up to $1,670, but price is still in shoppers' favour
The UAE gold rate right now is at Dh189.75 for a gram of 22K
Dubai: Gold prices are holding rock steady at $1,670 an ounce through Friday, offering UAE gold shoppers to keep buying or make pre-bookings if they feel the price could drop further.
Prices did drop, on Thursday, to $1,659 an ounce, and the lowest point since late March 2020, as global markets reacted volatilely to the US Federal Reserve’s latest 0.75 per cent hike. Late on September 21, gold picked up slightly to $1,669, but in trades todays it slipped below the previous this year low of $1,663.
The UAE gold rate right now is at Dh189 for a gram of 22K, and had ranged between Dh189-Dh196.50 in the last 10 days. Shoppers will most likely wait to see if bullion prices get dragged below $1,650 levels in this current phase.
“The Diwali-related bookings/sales had already happened on September 15 and 16, which was when the UAE gold rate dropped overnight from Dh194 to Dh189,” said a jewellery retailer. “For the next round of heavy buying, shoppers would wait to see if there’s any chance of the price slipping below Dh185. That would be the next sales catalyst.”
This October will be one of the peak gold and jewellery buying phases, with the Indian festival of Diwali being marked on October 22. This is what jewellers are banking on, and any pricing that’s at near 3-year lows should help. Plus, tourists are returning after summer, with travel industry sources saying that group bookings from India are already at yearly highs.
“Even if it’s only by a few dirhams, there are different price triggers for resident and tourist shoppers on gold,” said a retailer. “The tourist buyer will be comfortable with Dh190-Dh195 a gram level, plus they are getting refunded on the 5 per cent VAT. In most cases, they are taking these purchases back to home markets where the currency has recorded quite a dip. So, the tourist shopper already has made a decent gain over the purchase price here.”
Chances for Dh185?
Some analysts are not sure whether gold prices can keep dropping. For one, gold remains a safe haven whenever inflationary pressures become dire. “The hawkish Fed projections are a rather grim outlook for the economy and that could eventually trigger a resumption of a safe-haven role for gold,” said Edward Moya, Senior Market Analyst at the FX consultancy Oanda. “Gold will remain vulnerable to selling pressure if inflation does not continue to ease - but it could start to stabilize now.”
So, everything is up in the air for shoppers when it comes to gold – but don’t wait too long to make a decision.
During the pandemic, gold had climbed as high as Dh235/gm in August 2020, showing how depreciation is almost always short-lived. There is an almost 20 per cent decrease compared to the highest post-pandemic gold rate, which was Dh234.50/gm in March this year, which further establishes the fact that this is the best time to purchase.
- Shamlal Ahamed, Managing Director for International Operations, Malabar Gold & Diamonds