Dubai gold: Should UAE shoppers worry about prices hitting Dh400 after latest US tariffs?

Dubai: Gold became the latest to get caught in US President Trump’s tariff wars – but should shoppers in the UAE and any market outside of the US worry about an imminent price surge?

Or of prices breaking through past Dh400 for 1 gram of 22K?

By Friday (August 8) evening, the global gold trade was starting to worry about one particular number – gold ‘futures’ had risen to a record $3,534 an ounce for deliveries in December. (Futures essentially set the pre-booking price for deliveries that take place at a later date.)

It meant that shoppers in the UAE are looking at a local price of Dh379.25 a gram for 22K for the next couple of days. (The price of 24K gram is Dh409.5.)

In the UAE, if gold is indeed at $3,534 an ounce in December, the Dubai gold price would be well above Dh400 for a gram of 22K.

The current Dubai gold rate is Dh379.25 a gram – and the all-time high remains Dh383.75. (The bullion price closed the week at $3,398.)

The Friday sudden increase came about after news broke that the new US tariffs would impose 39% duty on 1-kilobar bullion imports from Switzerland to the US. The new tariff also applies to 100-ounce bars.(Switzerland remains a dominant player in the global supply of refined gold.)

Until now, it was felt gold was excluded from any of the new US tariffs.

Gold industry sources in the UAE say that if the US reduces the 39% tariffs on Switzerland, gold too could get the benefit.

“All that is happening with gold prices right now is related to uncertainty about future Swiss gold shipments to the US,” said a bullion analyst. “This matter could be resolved soon – but there is no guarantee prices will ease below $3,300-$3,350 levels.”

According to Anil Dhanak, Managing Director at Kanz Jewels, whatever the situation, buying gold in the UAE will come with price and tax advantages.

“I think consumers will be encouraged to buy gold investment bars from Dubai as it would be cheaper compared to the US prices,” said Dhanak. “Currently, Kanz sources bullion from Switzerland and gold jewellery from India.”

That, in a nutshell, remains the hope with the local gold trade - i.e., the US tariff situation only ends up reflecting on retail prices of gold in that market. And not on bullion prices itself.

But for now, that tariff uncertainty is clearly showing in price movements. That's not the only one factor - worries about high inflation, the likely short-term future of the US and global economy, and geopolitical tensions are all weighing in.

As for the havoc caused on (August 8) by the new US tariffs, "What we’ve seen today isn’t just a price spike, it’s pure tariff mania," said Nigel Green, Chief Executive of deVere Group. 

“(Gold) futures surging into uncharted territory because one customs ruling turned the global gold plumbing upside down. This is what happens when political theatre trumps market logic.”

"The (US tariff) ruling threatens to divert trade away from the US, with London emerging as a potential beneficiary. 

Non-Swiss gold routed through UK refineries could, in theory, bypass the levy, but only if it meets strict origin and classification requirements.

 This could lead to costly recasting or re-stamping of bars, paperwork gambits, and a chain-of-custody battle with regulators who may crack down on anything that smells like circumvention."

- Nigel Green, Chief Executive of deVere Group