Dubai gold price now Dh15 higher in 8 days - shoppers switch to installments

Dubai: Dh15.25 in 8 days – that’s how much the Dubai gold price has risen, with a gram of 22K moving closer to never-before-seen Dh400 a gram.

Currently, the price is Dh391.25 as against the Dh376 that was there on Monday last week. The bigger worry for shoppers in the UAE is that the trend of sustained price increases is not showing any signs of slowing down.

“Right now, every price increase sets a new daily record – how can anyone expect to buy in these circumstances,” said a jewellery retailer.

It looks like gold is not in the mood to lose its momentum. This morning, in the global metals market, gold went past $3,500 – which was the previous all-time high set in April. Today’s rally went all the way to $3,508 before dropping down to $3,496. But no one is ruling out a further surge. (In India, the price of 1 tola (which is 11.66 grams is at Rs115,494.)

“Each day, forecasts that said gold will hit $3,600 an ounce by March next seems more likely to happen,” said a bullion analyst. “But instead of March, it could reach that level sooner than expected.”  

Regular gold buyers in the UAE have been responding to gold’s high prices by opting for lighter jewellery or preferring to buy digital gold. More trading platforms are now offering retail investors that option to buy smaller weights at affordable budgets – which makes sense given the kind of prices attached to gold these days.

One trend that UAE jewellery retailers are seeing is shoppers increasing the size of their 12-month instalment-based purchases. “There is a sentiment among shoppers that gold is the one investment they need to commit more funds into,” said a retailer. “Whereas if someone had signed up for a Dh1,000 monthly instalment scheme, they have now raised it to Dh2,000, even Dh3,000.

“It could be that they had joined the scheme hoping to have a certain gram of gold at the end of 12 months. They are raising the instalments because gold prices are shooting higher – and these shoppers want to get the same weight in gold.”

So, there will be a series of announcements on the state of the US economy in the coming days. Plus, the Federal Reserve meeting scheduled for mid-month. All of which will have a say on gold's direction.

"Gold should continue to push convincingly above $3,500 and onwards," said Chris Weston, Head of Research at Pepperstone consultancy.

"The threat of a protracted showdown (between US government) with Federal Reserve Governor Cook in the US Supreme Court is also a big gold positive.

"While there are risks to gold at these levels, there are a number of big catalysts that are clearly not in the price - including increased interest from Chinese traders - and these could easily build."