Gold is searing hot right now for shoppers in the UAE - and everywhere else. Image Credit: Virendra Saklani/Gulf News)

Dubai: Gold zoomed past $2,100 an ounce for the first time, went all the way to $2,143 to set new records for how high the ultimate safe haven asset can reach.

For retail gold shoppers in the UAE and elsewhere, it's a time to be on the sidelines until gold prices cool down again. Currently, in the international markets, gold is trading at $2,087 an ounce, and so some cooling off has happened.

By 12.15pm, gold prices did cool down, to $2,061 levels. But it's still looking like the volatility is not about to go away soon.

"No one can predict what's up next for gold," said Anil Dhanak, Managing Director of Kanz Jewels, who was absolutely shocked by the latest surge pricing. "Gold prices are beyond control for the moment.

"I keep telling all the time - gold buyers will need to adjust their expectations of what the prices would be. And I keep telling them to spend on gold, the one asset where depreciation doesn't come into play. I wish more people would listen - gold is the ultimate safe haven."

On Monday (December 4), the first UAE gold rate for the day was set at Dh233.75 a gram for 22K. The all-time high is Dh235.

The high gold levels could be there until December 12/13, which is when the US Federal Reserve has its next meeting on interest rate decisions. Any signal on when it might start dropping rates could be the next price stimulant for gold.

Stock - Anil Dhanak
For Anil Dhanak of Kanz Jewels, gold as a 'safe haven' asset is the only dynamic that matters. And he hopes more UAE shoppers will keep thinking on these lines. Image Credit: Supplied
What's the UAE gold rate?
In the UAE, the 22K gold carat closed at Dh232.75 a gram on December 3, and shoppers can expect an immediate spike once today's UAE gold rate is set around 9am. Resident shoppers would obviously wait for some calmness to seep back into gold prices.

The highest UAE gold rate was the Dh235 a gram, which was in 2020 during the peak Covid phase.

But one thing is for sure - the dynamics of gold pricing has changed as of today.

A record, yes - but this high?

Gold had previously hit the $2,000 plus levels during the Covid times in 2020 and after the start of the Russia-Ukraine crisis in February of 2022. All through these years, it had remained at elevated levels of the high $1,800s and up to $1,950 an ounce. In between, there were occasions when it would drop under $1,800 and in October-November of 2022 had slipped to under $1,700. (That turned out to be a good Diwali buying phase for UAE shoppers and retailers.)

In Dubai, the metals and commodities focused free zone DMCC had held a conference last week, and the 'Sentiment was that gold stood every chance of shooting to $2,150 levels'. No one might have thought it would be close to these levels in just days.

- Abdul Salam K.P., Executive Vice-President at Malabar Gold & Diamonds.

What explains the gold rush?

The reason - Expectations in the global markets that the US Federal Reserve is done with more interest rate hikes for good. That would be after 11 increases since March 2022.

If the Fed is winding down rate hikes, global investors see more 'value' in gold, and this is exactly what is happening. Dollar's softening as is US Treasury.

Ahead of today's record climb, gold was already trading close to its previous all-time high of $2,074 an ounce. 

What should shoppers be doing?

Sit on the side-lines until the latest gold price frenzy plays out would be an obvious move. Depending on today's gold rate - and how prices fare this week - there could be a strong inclination among resident consumers to sell some of their holdings, or even exchange them. "People are waiting to see what would make absolute sense - sell or exchange," said Salam.

Here's a simple math for shoppers - on an ounce basis, gold prices are up just over $300 compared to a year ago. (One ounce equals just over 28 grams.)

Tourist shoppers in the UAE will not be swayed by today's price soaring, according to Dhanak. "They would come to the store, see something they like and for them the only price that matters is what would be the price difference between gold buying in Dubai and what's there in their home market," he said. "And then they make the purchase..."

Bitcoin and other cryptocurrencies too are on the march
Along with the gold price rush, there is a crypto rally going on, 'fueled by expectations of cuts to US interest rates and increased ETF issuance," said Sameer Lakhani of Global Capital Partners. "The crypto spike appears to have gone overboard in terms of optimism. Whilst it’s been near impossible to predict the price path with any degree of certainty, it appears likely that future moves will more likely be headed lower."

Bitcoin, which is at $39,769, is already up more than 140 per cent year-to-date.

More to follow...