Dubai: It could be advantage time for UAE shoppers as gold prices dropped by $27 to $1,735 an ounce early on Monday – this is only the second time since early April that values have dropped from the solid $1,800 plus levels seen for the better part of this year.
The all-important Dubai Gold Rate is at Dh200.75 a gram for 22K early Monday, and could dip further if the pressure on gold remains steadfast through the day and beyond. What UAE shoppers should look for is whether the price can go all the way down to Dh191.75 a gram that was there on March 21, which has been the lowest point so far this year. (The highest point for Dubai Gold Rate this year has been the Dh217.25 on June 1.
“All that the UAE gold market and shoppers want to see is prices heading lower for a full week or so – and then the pent up demand will return,” said the owner of a leading jewellery store network. “Shoppers are comfortable with anything under Dh200 a gram – but prices need to hold at these levels to convince them to buy now.
“If we get lucky and this drop continues to Dh190 a gram levels, we could see some demand. There are still a lot of residents holding on to spare cash because they haven’t had any travel to do this summer. Gold buying will be a good option at Dh190 or thereabouts.”
$42The drop in gold prices in the last 30 days
The latest gold price fall too has to do with what’s likely to happen for the global economy and how soon the next interest rate increase by the US Federal Reserve is likely to be. (Gold loses some of its lustre as a safe haven asset when interest rates rise and investors have other options to park their funds.)
Which UAE shoppers and their retailers would welcome after enduring a tough 18 months of subdued demand.
So far this year, UAE jewellery retailers have relied on gold exchange schemes and heavier discounts on gold and diamond collections to pick up shopper interest. While buying has definitely improved from the worst performance ever last year, it is still a long way off from getting to pre-COVID-19 levels.