Dubai: UAE gold jewellery prices have gotten pricier since the beginning of the year and it looks on track to hit more than Dh160 per gram over the next several months.

The precious metal, in its highest purity (24 karat), now costs Dh159.25 per gram when purchased in the UAE, up from Dh156 in January 7.

Prices of other gold pieces have likewise increased by the same margin, with gold jewellery made in 22K now selling at Dh149.50 per gram, 21K at Dh142.75 and 18K at Dh122.25, according to the latest data from Dubai Gold and Jewellery Group.

If they’re waiting for some price relief, jewellery fans could end up disappointed, as prices could again go up over the next several weeks.

According to Vijay Valecha of Century Financial, 24K gold could touch Dh167 per gram in 2019. “Gold is likely to perform well this year as trade war concerns and the likely end of the global business cycle in the next two years increases the safe haven attraction of the yellow metal,” Valecha noted.

The precious metal is also regaining its lustre after it became clear that the US Federal Reserve is not increasing interest rates for the time being.

“Gold prices are higher after seeing buying support from a more dovish US Federal Reserve,” said Century Financial in its weekly market report.

Buying activity within the UAE’s gold retail industry has already seen a drop in demand, with the introduction of value-added tax (VAT) putting off some price-conscious buyers.

The latest data from the World Council showed that jewellery demand in the UAE and Saudi Arabia was “very weak” throughout 2018. “Both markets were affected by the introduction of [five per cent] VAT in [the first quarter of] 2018, “ said the World Gold Council.

There was a lot of buying activity in the UAE during the last quarter of 2017, shortly before the new tax took effect, and the consumption data during that period eventually eclipsed that of the last quarter of 2018.

“Purchasing activity ahead of the tax change boosted Q4 2017 demand, making Q4 2018 demand weaker in comparison.”

One of the factors that is making gold pricier is that investors are now more interested to put their money into safe haven assets, particularly since the US Federal Reserve is holding off interest rate increases.

The latest statement from the Federal Open Market Committee (FOMC) has indicated that there will be no monetary policy changes this time and that policymakers will now be patient on future interest rate adjustments.

“The statement also suggested the Fed will not be in such a hurry to further reduce its balance sheet of US securities. While no change in monetary policy was expected, the FOMC statement was deemed fully dovish on US monetary policy and this could be bullish for gold,” said Century Financial.