Is Dubai gold price going to set another record high?

Dubai: The Dubai Gold Rate is just Dh3.25 away from its all-time high as shoppers’ hopes of some price softening were dashed overnight. The local gold price for a gram of 22K is Dh378.5 and within touching distance of the Dh381.75 record set 48 hours earlier. (The 24K price today is Dh409.)

If this trend continues, this would make for a difficult few weeks for the UAE gold trade, with late May and early June usually providing higher than average sales. This demand used to come from UAE residents buying gold ahead of their holidays in June during the school break or tourists flying into the UAE.

“Trends suggest there will be subdued demand for early June sales if these price trends continue,” said a gold retailer. “The high cost of gold plus travel-related expenses just doesn’t offer any room for resident-shoppers to make a decent price gain by buying here and selling in their home country.”

There is even more pain being inflicted, with some potential buyers from overseas planning wedding-related purchases of jewellery in the UAE cancelling their trips, according to trade sources. (In India, today's gold rate for a gram of 22K is Rs9,076.)

Before yesterday, the impression was that gold prices would soften somewhat if the US Federal Reserve offers some positive notes on where the US economy is heading. But yesterday, the Fed chief Jerome Powell had nothing much to offer – and that the President Trump’s tariffs could delay rate cuts by even a year.

That’s not the message investors wanted to hear and that’s one reason why they are doubling their exposures in everything to do with gold.

And that’s of no help to shoppers.

Gold is trading at $3,404 an ounce right now, just off the $3,412 levels it was at earlier in the day.

For any potential shopper out there, it will mean another day waiting for gold prices to cool off. But will it?