Dubai's gold jewellers will be hoping buyers make a return as prices slip below Dh180 a gram. It was at around Dh189 earlier this week. Image Credit: Guld News Archive

Dubai: Gold prices are coming back to Earth - since morning it has dropped $25 dollars in the global commodity markets to be in the $1,555 plus an ounce range. That’s quite a climb down after it briefly crossed $1,700 on Monday (March 9), for the first time since 2012.

Dubai Gold Rate is now at Dh179.75 for 22K, dropping a dirham from Thursday's retail price. Over the last two days, the Dubai rate is down by Dh10 a gram, and in the past this had been enough to set off a buying spree. But will it be enough to bring shoppers back this time?

"Yes, such a steep drop in local gold prices could support buying activity," said Cyriac Varghese, General Manager at Sky Jewellery. "But the coronavirus fear factor will also have a sizeable impact. It's still uncertain times." 

Check out the latest gold rates

Gold prices are engaged in a stiff fight with the falling Indian rupee - Asia’s weakest performing currency at the moment - and others. Will UAE shoppers want to pick up a few grams of gold rather than use their currency’s weakness to remit back home?

The rupee is at 20.22-20.30 to the dirham, and could drop further through the rest of the day.

“Right now, the market can only rely on UAE shoppers - the coronavirus has affected travel plans and it will take some time before tourist buying regains lost ground,” said a jewellery retailer. “If the local gold rate drops below Dh180 - it should - and remains at these levels, we are expecting some demand for gold coins (which do not carry VAT).

"But it will be a stiff fight given how the rupee is dropping."