A man wearing a protective face mask as a preventive measure against coronavirus disease (COVID-19), walks at the Deira Gold Souq in Dubai, United Arab Emirates, March 18, 2020.
For the moment, gold is running hot, with the Dubai Gold Rate early on February 22 at Dh215.50 a gram. Image Credit: Reuters

Dubai: Gold prices have gone past the $1,900 an ounce levels as investors turn to it as the ultimate safe haven during a global crisis sparked off by Russia-Ukraine tensions. For gold shoppers, however, it would mean postponing whatever plans they had for any immediate purchases, with the Dubai Gold Rate now at Dh215.50 for a gram of 22K.

This is the first time that gold has gone past $1,900 since the first week of January 2021, and trading close to $1,910 early on Tuesday (February 22). At the time, it had touched $1,944 an ounce before dropping all the way to $1,684 in March. Shoppers in the UAE (and elsewhere) are better off waiting for the tensions to simmer and gold prices to come down from their elevated levels.

The Dubai Gold Rate is now at Dh217 a gram. 

“Gold might rise to Dh220 a gram in the current rush, if international prices push towards $1,940-$1,950 levels,” said a commodities analyst in Dubai. “What shoppers need to watch out for is a sudden and dramatic cooling off if the border issues between Russia and Ukraine are sorted out.

“Also, by March, US interest rates will start rising, and that means investors will have other asset classes to choose other than gold. So, early to mid-March is when gold prices should see some respite.”

Dh232per gram


Highest point ever for Dubai Gold Rate, which it touched in late July/Early August of 2020

A Dh10/g+ gain

In the UAE, the local gold rate has gained more than Dh10 a gram since the start of the month. It immediately weakened demand, both among resident shoppers and tourists. Even the February 14 Valentine’s Day promotions did not elicit much of a response from buyers.

Jewellery retailers are responding to the slack demand by slashing manufacturing charges – but that may not be enough to tempt shoppers to return to stores and make fresh purchases. Even gold exchange schemes are weak at the current price levels. Retailers, however, said that they had increased traffic at their stores from people wanting to sell their gold for cash.

“Anything in the Dh210 a gram plus range has been a trigger for UAE consumers to sell part of their gold,” said a retailer. “Many of these sales relate to gold bought when the Dubai Gold Rate was Dh160/Dh170 a gram. There’s a straight profit there.”

Jewellery retailers in the UAE will be hoping that once gold prices subside these sellers will return to buy more of their favourite metal. As to when that happens is the question.

Will gold recede from $1,900/oz soon?
"It's been a choppy start to the week in the gold market, with the yellow metal initially seeing some profit-taking but quickly found itself back in demand as the headlines turned ugly once more," said Craig Erlam, Senior Market Analyst at Oanda.

"While there is still hope for diplomacy, which would reduce gold's safe-haven appeal, there's certainly reason to believe an invasion could happen. That will continue to see gold well supported and, in the absence of serious progress on Thursday when (US Secretary of State Antony) Blinkin meets (Russian Foreign Minister Sergey) Lavrov, a break may not be far away."