Dubai: Prices of 22K gold in the UAE have hit a new high of Dh237.5 a gram as bullion rates surged by nearly $30 to currently be at $2,112 an ounce levels in the global commodity markets. The surge has been intense and could yet push bullion to its previous highest of trading around $2,150 an ounce levels last December.
As for the UAE gold rate, the previous highest point for 22K had been Dh235 a gram, which was struck back in 2022. Even last December, when bullion had been hitting $2,140 plus trading levels, the UAE gold rate had not breached Dh235 a gram. It had at the time peaked at Dh233.75 a gram.
As for gold shoppers in the UAE and other markets, they are better off waiting for the metal to cool down from its push higher. Since the start of the year, gold had been at elevated $2,000 plus levels – but this current upsurge to $2,100 and over could take it to new highs.
Investors seem to be losing confidence in the US dollar ever since the talk about immediate US interest rate cuts have kind of wound down.
Gold thus joins Bitcoin in this new surge coursing through global markets. The crypto currency has just gone past the $68,000 mark, and probably well in line to go past its all-time best of $68,999.99 (which was in November 2021). In December last, Bitcoin was trading at $42,000 plus levels.
What's fueling gold?
"What's happening is that investors are diversifying into other assets," said Vijay Valecha, Chief Investment Officer at Century Financial. "Investors seem to be losing confidence in the US dollar ever since the talk about immediate US interest rate cuts have kind of wound down.
"This latest move looks like it's the start of a new price zone to be formed for gold."
Until recently, 'new highs' for gold would have been anything close to $2,000 or just over levels. Pushing past $2,100 is still quite untested territory, but there are many analysts who reckon this could well be part of the new normal for the asset.
Firstly, the latest jobless data in the US sent shockwaves through the markets, prompting investors to seek safe-haven assets like gold.
Now, a run all the way to $2,500 at some point is what market watchers are talking about. While that's good for an investor, it's not necessarily so for a shopper. Even if the person is buying gold jewellery for investment purposes, the current price of entry is turning out to be quite a major hurdle.
A perfect storm
"Gold surged back above $2,100 amidst a perfect storm of factors," said Anil Dhanak, Managing Director at Kanz Jewels. "Firstly, the latest jobless data in the US sent shockwaves through the markets, prompting investors to seek safe-haven assets like gold. Secondly, mounting global uncertainties further fueled the rush to gold, underscoring its enduring appeal as a hedge against economic instability."
This is what shoppers will have to factor in next time they are out for gold.
