Dubai: Gold jewellery prices in the UAE dropped to their lowest level in weeks as the US dollar strengthened, offering a much-needed price relief to consumers.
Retail rates across the stores and souks posted a decline of approximately Dh2.50 per gram on Monday, with the 24-karat gold selling at Dh154.50 per gram, down by 1.6 per cent from Dh157 last May 20.
The price of 22K also dipped by the same margin to Dh145.25, while 21K and 18K slumped to Dh138.50 and Dh118.75, respectively.
The lower prices offer buyers in the UAE an opportunity to stock up on the yellow metal before the bullion will again start climbing. However, the relief could be short-lived, with analysts betting on the precious metal to rise this week and touch $1,298 an ounce amid the geopolitical tensions in the Middle East and the US-China trade war, as well as the volatility in the equity markets.
During the early session on Monday, spot gold’s price per ounce fell to $1,274.39, the lowest since May 3 this year, according to a Reuters report. The bullion later settled at $1,276.83 an ounce. The US dollar index had moved slightly higher on the back of concerns about the parliamentary elections in Europe.
According to Davis Hall, global head of forex and precious metals for Indosuez Wealth Management, the precious metal is still moving towards a positive direction. He predicted that the bullion could break out of the $1,235 to $1,345 range.
“The underlying supply and demand fundamentals for gold are getting better and better as time evolves and the global economy inevitably slows and clouds over. The lose-lose backdrop
of trade war frictions and tit-for-tat tarriffs will cap growth, delay the investment cycle and bring back the spectre of more quantitative easing policies for longer,” Hall told Gulf News.
“This bodes well for the yellow metal as the opportunity cost element will not weigh any further against it. This is occurring just as central banks persist with their voracious appetite for more physical bar hoarding.”
“Furthermore, geopolitical tensions in the Gulf are boiling up, with oil prices on the move higher. This cocktail could well prove enough to break gold out of its wide consolidation band between $1235 - 1345.”
Vijay Valecha of Century Financial noted that gold could reach as high as $1,298 an ounce this week. He said the performance of the stock markets, which have been extremely volatile since the last two weeks, has helped propped up gold.
“The price of gold is expected to see a rise in the coming week even though as hopes for a US-China trade deal to go through is on the cards this week, since this battle has always been turning on its head and could continue the volatility in the markets,” Valecha said.
“The tensions in the Middle East are also rising very fast and could be a major factor in the bullish nature for the safe haven. Gold has a major support at $1,272 per ounce and this support should most likely hold and it is expected to go as high as $1,298 per ounce during the week.”