Dubai gold rate: Will an Israel-Iran ceasefire bring price to under Dh370?

Dubai: ‘If a ceasefire deal is done, how much will the Dubai gold rate drop?’

That’s the one question popping up in the minds of everyone associated with the gold and jewellery trade in the UAE, especially with the crucial Dubai Summer Surprises promotions opening June 27. “If the Dubai gold rate drops to Dh365-Dh370 a gram levels, shopper response will be good,” said a gold dealer.  

This DSS, Dubai has slashed the entry price for the raffle draw to Dh1,000 in another bid to get shoppers return to gold buying in a big way.

Early today - after the dramatic events of last evening related to the US-Israel-Iran situation - some hope is starting to burst through that a deal to end hostilities will be struck. Gold prices had dropped as soon as US President Trump announced a ceasefire possibility.

At 7am, the Dubai gold rate is at Dh374.25 a gram for 22K, down from Dh377 late yesterday when regional tensions were running high. “The real drop will happen only if the ceasefire is confirmed,” said a market analyst. “The markets are awaiting that message of ceasefire.

“For now, the hope that hostilities are ending is what’s driving the gold price drop.”

Under the current global circumstances - and not just those related to the Israel-Iran hostilities - gold prices will continue to be elevated at $3,200-$3,400 an ounce levels. (One ounce is 28.34 grams.) Which means the Dubai gold rate would continue at well over Dh300 a gram levels.

So, a rate that shoppers would be comfortable with is anything close to Dh350-Dh360 a gram.

"The issue is that since April - when the hike in US import tariffs were announced - and since June 14 the start of the Israel-Iran war, gold prices have been sticking to well over Dh365 levels for the better part," said an analyst.

"This is definitely not 'shopper-friendly' pricing, which is why there has been subdued demand for gold and jewellery.

"Shoppers will come back only if there is a sustained price drop."

Question is whether a ceasefire will help...