Stock UAE Gold
Gold has come under pressure overnight, dropping more than $20 an ounce to $1,792 levels. Is there enough time to drop some more ahead of last minute gift buying? Image Credit: Ahmed Ramzan/Gulf News

Dubai: The UAE gold rate is currently at Dh201.50 a gram for 22K as bullion prices come under renewed pressure. Early on Friday, shoppers were hoping that the overnight price decline would pull the local gold rate to Dh200.

Even then, at Dh201 levels, the rate is seen as favorable for last-minute Christmas or New Year purchases. Gold prices edged up on Friday ahead of a long holiday weekend as US inflation data showed some cooling, yet perhaps not significant enough for the Federal Reserve to slow down their rate-hike path. Spot gold edged up 0.1 per cent to $1,793.68 per ounce by 10:00 a.m. ET, while US gold futures rose 0.3 per cent to $1,800.30.

Bullion prices dipped over 1 per cent on Thursday after US GDP data highlighted the country’s economy rebounded faster than previously estimated, potentially setting the Fed on a keener path to fight inflation. While gold is seen as an inflation hedge, rate hikes to tame soaring price pressure weigh on the non-yielding asset that pays no interest.

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If that happens, the UAE gold rate should find itself closer to Dh200 a gram - and enough to pull in some last-minute buying by UAE consumers ahead of Christmas and New year. This is what UAE retailers are hoping for. (Because the global commodity markets are closed on December 26, the next round of action for gold will be on Tuesday.) What’s in store for gold?

Stock UAE Gold
Dubai's Gold Souk Extension has helped create a new generation of gold shoppers.

In the New Year, The consensus seems to be that gold will stick to $1,800 plus levels and push once more towards $2,000 if the global economy does drag itself into a recession. With a recession on, gold will once again be the ultimate safe haven asset that investors will want to get into. And that will put shoppers at a disadvantage.

Kanz Jewels
Anil Dhanak, Managing Director at Kanz Jewels: "The Dubai gold industry is always at the forefront when it comes to providing value to customers and will continue to do so in '23."

What should UAE shoppers do?

Keep tracking gold’s movements through the rest of today. Later this evening should give them enough pointers.

Even as UAE resident-shoppers await a firm price drop, tourist spending on gold in Dubai and the UAE has really caught on this December, and more so after the launch of the DSF promotions. For them, it doesn’t seem to make much of a difference whether the UAE gold rate is Dh202.75 (starting price today) or Dh204 (which is what the rate was December 21) or Dh199 (on December 15).

Stock-Joy Alukkas
Joy Alukkas, founder and Chairman of Joyalukkas: "Dubai and UAE’s status as a gold hub has reached a point where tourists are ready to buy some whatever be the price." Image Credit: Supplied

“Tourist spending on gold in the UAE this December is at its highest point in the last 3 years,” said Joy Alukkas, founder and Chairman of Joyalukkas. “Flights to UAE from India are running full, and just about every visitor will be returning after a trip to the gold store.

“Dubai and UAE’s status as a gold hub has reached a point where tourists are ready to buy some whatever be the price.”

Gold at $2,000 is a possibility

Do you foresee any major changes in UAE shopper expectations from gold?

"There won't be any. The Dubai gold industry is always at the forefront when it comes to providing value to customers and will continue to do so in '23. I expect the gold rate to go up in the coming days, and feel it will reach closer to $2,000. This is primarily on account of global market uncertainty due to various issues, including the sudden spurt of Covid cases in some parts of the world. "

In UAE, are you seeing tourists raising their spend on gold?

"The influx of tourists is higher. Gold is something that tourists want to buy when they come to Dubai. If the tourist flow continues, there will be a good increase in gold buying."

- Anil Dhanak, Managing Director at Kanz Jewels

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Abdul Salam KP Malabar Gold 30122018
Abdul Salam K. P., Vice-Chairman at Malabar Gold & Diamonds: “2022 clearly showed that UAE’s gold and jewellery consumer base has widened significantly beyond serving resident consumers and visitors from the Subcontinent.”

Even visitors/tourists to the UAE from outside of the heavy gold consuming markets are spending big on their choice of precious metals/stones. “Gold or diamond buying has become a must-do activity for tourists, irrespective of their nationality,” said Abdul Salam K. P., Vice-Chairman at Malabar Gold & Diamonds. “This was clear from the spending patterns during the World Cup phase, and again after the start of DSF.

“2022 clearly showed that UAE’s gold and jewellery consumer base has widened significantly beyond serving resident consumers and visitors from the Subcontinent.”

As there have been fluctuations in the price of gold, resident-shoppers were a little cautious in their purchases. They waited for the DSF campaign, which gives them a chance to win 1 kg of gold a day. The market has improved with the onset of DSF even at current gold rates.

- Chirag Vora, Director at Bafleh Jewellers