Dubai: In afternoon trade Friday, gold has dropped below $1,700 an ounce, reaffirming the heavy pressure it has been for the past two weeks
This is the dilemma facing shoppers as gold sales in the UAE enjoy a second week of high demand and steadily dropping prices. If last week $1,750 looked like a good price to buy, those shoppers who remained patient are early on Friday staring at the prospect of picking up the metal and its jewellery variations at $1,713.
The Dubai Gold Rate is currently at Dh194.50 for 22K. “Shoppers have learnt their lessons from the way gold prices have performed since January 1, 2020,” said a retailer. “It’s been a fortnight of solid sales, but we feel there could have been more. But a lot of shoppers are taking a wait-and-watch.”
Book now, buy later
The favoured option for shoppers willing to wait is booking for a purchase a month from now. Or two months, depending on their equation with the retailer. Any further price drop on the day of their purchase will also pass on to them.
Raffles and discounts
Another plus for shoppers is that the promotions linked to Dubai Summer Surprises are on, which always improve the prospects for them of winning something. In addition, more jewellery retailers are bringing back discounts on making charges, which has the biggest pull on shoppers.
“Jewellers want buyers coming to their shops for something other than gold coins and bars,” said the retailer. “In this buying spree, thankfully, shoppers are intent on boosting their jewellery collections. The price drops in these two weeks have spurred some pent up buying among residents.”
Gold down to $1,650?
These shoppers who plan to wait would do well to watch the dollar, global stock markets and any news on what the US Federal Reserve plans to do next. Even if these shoppers have no interest in the monetary world. Because everything that’s happening to gold prices is driven directly by that.
So, when the dollar’s value is rising, and it is now, then gold takes hit. And the dollar is in for another likely round of gains closer to the end of the month, depending on whether the US Fed raises interest rates by 1 per cent or 0.75 per cent.
“For now, a break of $1,700 is looking very possible, with $1,680 then key,” said Craig Erlam, Senior Market Analyst, UK & EMEA at Oanda, the FX consultancy. “There may well be more pain to come for gold...”
Any ‘pain’ for gold works to shoppers’ advantage. In the UAE, that’s exactly what shoppers are – or should be – looking at. More pain for gold adds up to major gains for them.