Dubai gold price at lowest this weekend since May 30 - will shoppers make a slow return?

Dubai: This weekend, shoppers in the UAE with plans for a gold purchase will enjoy the lowest Dubai gold price in nearly 30 days, with a gram of 22K being Dh365.5 and 24K at Dh394.5. It was on May 30, that the local rate was at similar levels, and spending most of this month at well over Dh370 levels for 22K.

Late yesterday, there were moments when it did look as if the price could drop by a further Dh2-Dh3 a gram – but eventually settled at Dh365.5. UAE gold and jewellery shop sources confirmed there was a ‘slight’ increase in shopper traffic to their stores, once it became clear that gold prices were dropping quite significantly.

The latest gold price fall has been the most sustained one in recent weeks, after at point around mid-June, it looked that the 22K Dubai rate could be pushing closer to Dh390 levels for the first time. (The highest price to date is Dh383.75 a gram from mid-June. In India, price of one tola (11.66 grams) is Rs104,969, down by just over 4% in the last 7 days.)

"There is a positivity in the market while the gold price dropped to the level of Dh365.50," said Abdul Salam K. P., Vice-Chairman of Malabar Gold & Diamonds. "Customers who are on the last leg of their summer holiday buying got a good relief on the prices. They are enjoying such a price after a long gap."

Such was the price drop on Friday that many shoppers will be hoping the trend continues into next week when global markets open. Some of the increased activity came about because of the start of the Dubai Summer Surprises’ gold-specific promotions.

“Anything around the Dh350-Dh355 for 22K would be rated as being in ‘shopper-friendly’ levels,” said Anil Dhanak, Managing Director at Kanz Jewels. “If everything is as it is right now, we could see Dubai gold price move back to Dh350-Dh355 in another 2-3 months."

Clearly, UAE gold shoppers need a price they can feel comfortable with. And prices above Dh370 isn’t what any shopper would call as being in their buying arc.

Whether gold prices will continue to drop is still a big ‘if’. The Middle East high conflict situation has eased for now, but there are the usual worries about the effect on the global economy from the US tariffs. There is also the matter of whether the US Federal Reserve would go for another interest rate cut in July.

The latest gold price ‘crash’ – dropping by nearly $60 on an ounce basis - had plenty to do with a trade deal likely to be struck between the US and China. It could have been better, but the US President Trump late yesterday said negotiations with Canada on another trade deal was being put on hold.

So, all eyes on Monday as to which way gold is going to head next. But this weekend, shoppers in the UAE are getting the lowest price since May 30. That’s not changing…