At current Dubai gold price, shoppers decide it's best to wait

Dubai: The Dubai gold rate remains stuck at Dh360 a gram for 22K levels – but shoppers in the UAE are just not interested in this price stability.

The shopper sentiment is to wait for any further price drops, with many UAE residents even dropping plans to buy some gold jewellery before their upcoming holiday trips for summer starting next month.

There is a real sense that current gold price levels are ‘inflated’, say gold retailers, adding that shoppers’ seem to believe that if they wait, the rate will slip towards Dh350 a gram levels.

“We can see the consumer mood is downbeat when it comes to buying gold jewellery right now,” said a retailer. “There are still walk-in customers who are willing to pick gold coins and bars for investments.

“There are also those UAE residents who have raised their monthly payments for the 12-month instalment plan jewelers offer.”

But there is limited shopper appetite for gold exchange offers at current prices. Why? Shoppers believe they are better off waiting to see which way gold prices are heading next. And they are prepared to wait.

Through the last 7 days, the Dubai gold rate has remained between Dh355-Dh360 levels, and once has to go back to May 11 for the day's rate to show Dh371.

"In an ideal world, shoppers should have been enthused by the drop from Dh370 plus levels to today's Dh360," said a jeweller. "But this is not an ideal world. UAE shoppers are thinking whether there could be a Dh20 or Dh30 a gram drop. That explains why many are in the mood to delay a purchase."

Gold dealers and analysts sort of agree with shoppers’ mood on current gold price levels. All that it requires for a downward shift is for worries about the US economy to ease.

Last week, there were signs at various times that gold could indeed be heading towards Dh350 a gram. But then came renewed fears about the US after credit rating agency Moody’s downgraded the US economy.

"Easing geopolitical tensions, particularly between China and the US, have reduced demand for traditional safe-haven assets (such as gold)," said Daniela Hathorn, Senior Market Analyst at Capital.com.

"Unless these tensions re-emerge or President Trump rekindles confrontation with trading partners, gold may remain on the back foot in the near term."

That's exactly why shoppers in the UAE are deciding to wait it out...