A gold shop staff in Dubai. Image Credit: File / Gulf News

Dubai: Dubai’s 22K gold price was set at just under Dh180 a gram on Monday (January 6), putting further pressure on the jewellery sector in its attempts to win back shoppers.

Gold will sell at Dh179.25 a gram, but the pressure on the price could be relentless in the days ahead.

Latest gold rates here

For comparison’s sake, all through 2019, the highest gold reached was Dh175 a gram, and that was enough to significantly bring down demand in the second-half of the year.

What's the latest on global gold rates?

“From Friday’s $1,553 an ounce, early bullion trading today (Monday) has already seen it increase by $25 — these increases will be reflected in Monday’s Dubai price,” said Abdul Salam K.P., Executive Director at Malabar Gold and Diamonds.

“Any level above Dh170 a gram puts a leash on shoppers. At Dh180 plus, the situation will get even tougher,” Abdul Salam added.

For comparison's sake, gold in Dubai on January 1, 2019 was selling at Dh146 a gram.

"With the ongoing situation between Iran and the US, there is considerable political instability and we have already had a 3 per cent price increase in the last two trading sessions," said Chirag Vora, Director at Bafleh Jewellers.

"If such instability continues, we will see the $1,600 level before the end of the week itself."

What is the fallout of the assassination of top Iranian general? 

The immediate spark for gold price volatility was set off by Friday’s killing of a top Iranian general in a US air strike.

Concerns that this would further worsen the Middle East situation led to sharp increases for key commodities, with oil and gold among them, on Friday itself.

Then followed the weekend break where there was no trading, but Monday’s price surge indicates that this is unlikely to end soon.

“Under these circumstances, there is hardly any incentive for shoppers to turn up even with the DSF 2020 promotions on,” said Cyriac Varghese, General Manager at Sky Jewellery. “The price increases will prove dizzy for everyone.”

Gritting it out amidst upward pressure: What do retailers say?

Sources in the local jewellery sector say there are no plans to revise or add to the existing promotions running during DSF 2020.

And with prices under such upward pressure, retailers said they will not initiate any promotions of their own.

And the worst outcome for the immediate future?

If gold continues this run and crosses the $1,600 an ounce mark — a level that the industry had earlier been predicting would be reached only later this year.

At the time, there were no assassinations of an Iranian general to factor into their calculations. There was only the worry about the US-China trade war and what it would mean to further slow down global growth.

Last Friday’s US actions have changed all that.

For gold shoppers in the UAE, it could turn out to be a long wait before prices reach any stability.