Dubai: International gold prices have dropped by more than $30 overnight to $1,811 an ounce, opening up a clear opportunity for shoppers in the UAE – domestic and tourists – to make a few purchases. The current price is actually the lowest gold has been since the start of the year, and could come under more pressure in the next 48 hours.
The first UAE gold rate of the day (March 8) has been set at Dh203 a grm, reflecting the overnight price drop in the global metals market. The local rate for 22K was Dh205.75 a gram last evening. (The previous low for 2023 was Dh203.25 on February 28.).
“It will be good to see if UAE shoppers return after today’s price drop – they had been quiet all through the last two months with gold at $1,850 and plus levels,” said a jewellery retailer. “We can be confident that tourists in Dubai and UAE will immediately respond to this drop. Everything will hinge on the first UAE gold rate of the day.”
Gold retailers agree that anything close to Dh200 a gram will set off a buyer rush going by trends in the past. The lowest point for gold in the last 6 months was the $1,626 in late October. (The UAE gold rate was around Dh185 a gram levels during that phase.)
“Tourist shoppers are most likely to come in first, most UAE resident shoppers will wait to see if gold could drop to below $1,800 in the next few days,” said another retailer. “That would mean the local gold rate dropping below Dh200 – they haven’t seen a lot of that in recent months.”
What brought on the gold dip?
Yesterday’s hawkish statements by US Federal reserve chief Jerome Powell of more - and possibly faster – interest rate increases is the catalyst for the drop. In one go, he dismissed speculation building up that the US Fed would finally slow down as there are signs of inflation easing up just that bit.
So, gold prices were instantly hit, setting off a drop from $1,858 an ounce levels.
Heavy on price volatility
If they are in the mood to buy, UAE gold shoppers should not be delaying beyond a point. What the last three years have shown is that gold prices are under constantly volatility, and the favourable price levels could appear and vanish just as quickly. For confirmation, they need to look back to last September and October, when it was felt that gold could remain stuck to under $1,650 levels.
That did not happen...
- Edward Moya, Senior Market Analyst at Oanda