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Gold rates soar to highest level in more than 3 months

Local jewellery rates soar at the same time as VAT takes effect

Image Credit:
Crowds at Malabar Gold and DiamondsPHOTO Suchitra

Dubai: With the value-added tax (VAT) just taking effect and the global price of gold soaring, UAE residents will now have to shell out more out of their pockets to make jewellery purchases.

Gold’s bullish start to the New Year continued on Wednesday, hitting the highest price in more than three months due to a weak US dollar.

The precious metal kicked off 2018 with a bang, breaching the $1,300 levels at the start of the year. By the third trading day of 2018, spot gold has rallied to as much as $1,311 an ounce, the highest it has reached since September 18, 2017.

The rally has triggered a climb in local jewellery prices in the UAE, and as of 9.50am, 24-karat gold in Dubai was trading at Dh159 per gram, while other popular pieces such as 22K, 21K and 18K were retailing at Dh149.25, Dh142.50 and Dh122.25 per gram, respectively.

The price increase has come at a time when UAE households are entering into a new regime of taxation. With the introdroduction of value-added tax (VAT) effective January 1, residents are paying an extra 5 per cent on most of their purchases.

“Gold has clearly benefited from lower US yields and as much weaker US dollar into the year-end, and we can expect quite a bit of urgent short covering in a think market,” Century Financial said in a research note sent to Gulf News.

“As global complacency over the trajectory of US rates continues to be astoundingly low, precious metals, in general, should continue to benefit. Anti-pollution measures in China squeezing the prices of industrial metals heavily will also continue to provide an indirect boost.”

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