UAE gold prices: Shoppers need some getting used to with prices sticking to $2,050 levels

Dubai: Gold and Jewellery shoppers in the UAE – and everywhere else, for that matter – need to take a backseat as the precious metal seems bent on setting new records. Their hopes that gold prices would cool down after the latest US Federal Reserve announcement have not come to pass.

At an eye-watering $2,049 an ounce – the UAE gold rate at Dh229.25 a gram – consumers will find it difficult to make regular trips to jewellery stores to add to their holdings. For a new generation of shoppers now fancying investments in gold, current prices dictate they will need to wait and watch.

Because the current rally in gold could even take it past the all-time high of $2,070 (set in mid-2020), and then make a run to the $2,100 an ounce level. That could then mean more waiting for gold shoppers.

UAE shoppers hold back in Q1-23

In the first three months of 2023, UAE gold buyers have already made their feelings clear about the prices, a period when bullion was averaging $1,890 an ounce. According to the latest World Gold Council data, UAE shoppers bought 9.7 tonnes of gold jewellery in Q1-23, but down from the 12.5 tonnes same time in 2022. (For full-year 2022, UAE’s overall gold jewellery sales were 46.9 tonnes, making it the biggest Middle East market for the asset, ahead of Saudi Arabia with 37.9 tonnes.)

Similar buying dips were recorded in just about every global market where gold is a favour consumer choice, except for in China, where demand perked up significantly because of the Chinese New Year seasonal buying. India, the second biggest market for gold, too saw a dip as shoppers fretted about prices.

“At current price levels, gold is an investor story rather than about consumers,” said Andrew Naylor, Head of Middle East and Public Policy at World Gold Council.

With investors and central banks in the fray, shoppers worldwide will have to bide their time for the next window of lower price opportunity.

Fed’s move sparks latest gold rush

Another rate hike from the Fed last Wednesday should have, ideally, pulled gold prices down and stabilise/raise dollar’s pricing power. This time, there has been no such thing. This is the catalyst gold needed and the reason why it’s around $2,050 rather than the sub-$2,000 levels seen through most of Q1-23. (On Thursday, it briefly hit the $2,062 mark.)

SO, what should gold consumers be doing? Not much but wait for the jitters about the global economy to subside. That might take time, though.

“There are many factors that are at play here beyond the Fed’s signaling of a rate-hike pause,” Aziz Moti, General Manager and Head of Analysis at ISA Bullion.

What World Gold Council sees on demand

Smaller ‘windows’ for buying

Gold shoppers with long memories will remember much the same happened after the 2008-09 Global Financial Crisis, when gold was the only asset to offer some assurances in a highly uncertain time. That saw gold prices cross $1,900 during the period, a range that been unthinkable until the moment it happened. But as soon as the global economy, gold dropped and by quite a bit.

It might be too early to think about price drops for now, though. But would gold prices stretch to a new high of $2,100?

“Gold is going to shine given this macro backdrop and possibly eye a move above the $2,100 if the de-risking mood on Wall Street remains over the next few sessions,” said Edward Moya, Senior Market Analyst at Oanda. “The force is strong for gold bulls given all the banking turmoil and rising risks that the US will have a tough recession.

And any mention of safe havens makes it about gold.