UAE gold prices stay high: How can I invest in gold?

Dubai: Gold prices crossed record-highs this past week zooming past $2,100 an ounce for the first time, reaching as high as $2,143. While the prices have since cooled down, the metal remains pricey.

In the UAE, the 22K gold carat closed at Dh232.75 a gram on December 3 – the all-time high was Dh235 per gram which it hit during COVID. While gold remains ‘too hot to touch’ for most buyers – and it’s better to wait it out for purchases and investments – here’s how you could possibly invest.

Many people, especially South-East Asians, buy gold jewellery for dual purposes of owning and investments. Many choose to sell when prices rise or exchange old jewellery for new items during high rates.

The current surge in prices is being attributed to the US Federal reserve announcement coming next week. Most expect the authority to stop the hikes, after 11 consecutive hikes so far – driving up the price of gold.

Gold jewellery makes for solid investment when bought at lower rates but making charges can eat into the initial costs. If for investment only, physical gold bars and coins are your best bet.

However, gold in bars and coins are not an asset that can generate income when held. And it is also prone to liquidity problems and safety issues. In this case, a gold ETF may be your best bet. An exchange-traded fund (ETF) is a fund with a pool or basket of investments, which gives you a low-cost, relatively lower-risk investment vehicle.

A popular gold-traded ETF is the $57.8 billion SPDR Gold Shares ETF, which posted net inflows of over $1 billion in November. The SPDR fund is up nearly 11 per cent so far this year, lagging the near 20 per cent gains on the U.S. benchmark S&P 500 index.

Among some other ETFs tracking gold, the $26 billion iShares Gold Trust had net outflows of $388.5 million in November, while the $6.2 billion SPDR Gold MiniShares Trust had net monthly inflows of $23.6 million.

Gold prices inched higher on Wednesday (Dh226.75 per gram for 22K) buoyed by lower bond yields, while investors awaited for a crucial U.S. employment report that could set the tone for Federal Reserve's policy meeting next week.