A sudden shock is what gold prices delivered on shoppers evening of July 21. Early today, gold is still hovering around $1,713/oz mark. Image Credit: Reuters

Dubai: UAE gold shoppers have been left shaken as gold prices threw a tantrum on Thursday (July 21) evening, shooting up from $1,680 an ounce levels to the current $1,715. Many shoppers who had been planning to buy later today or the weekend have now decided to postpone.

In Dubai Gold Rate terms, the increase has translated into a price increase from Dh192.50 a gram for 22K to Dh194.25 currently. “In dirham terms, this may not seem such a steep climb, but the nature of the hike has been a psychological burden,” said a shopper who had been planning to spend around Dh15,000 this weekend on gold bars as assets. “The increase came out of nowhere, when everyone was talking about gold down to $1,650.

“Gold is still below Dh200 a gram, which is important. But I will decide later whether it’s better to buy or wait."

The Thursday evening spike had to do with events happening in the US and Frankfurt. First, the European Central Bank went for a 0.50 per cent interest rate hike, the first for the Eurozone in 11 years, and then just after, the US issued data that saw job losses rising. These were all that it took for the markets to bid up gold prices as a safe bet.  And left shoppers here dispirited.

Stock - Anil Dhanak
“I had said just yesterday morning that gold’s drop would be temporary. There’s always one reason or the other for prices to bounce back. All those UAE shoppers who bought yesterday morning and early afternoon got the lowest rates in the last 12 months. Let’s see what happens next.” - Anil Dhanak, Managing Director of Kanz Jewels Image Credit: Supplied
Will Dh194/gm convince shoppers?
UAE jewellery retailers estimate they might have lost 20-30 per cent of sales Thursday evening because of the gold rise shock.

"Sales this weekend could be subdued too, but we hope that shoppers will see they are still better off buying at Dh194/gm levels," said a retailer. "It may be difficult because they have just seen gold drop to Dh192+. Then, having to pay more becomes a block."

Best July in a while

Jewellery retailers in the UAE will not be complaining too much, they had their best first-half July sales in the last three- to four years, with the majority of gold buyers using the first drop below Dh200 a gram to stock up. By mid-month, those sales had subsided. Now, shoppers and gold retailers in the UAE await the next buy moment.

In the end, a weaker dollar and falling US yields allowed gold to record a decent gain for the day (July 21), although on the scale of recent moves in other asset classes, gold remains entrenched in the danger zone

- Jeffrey Halley, Senior Market Analyst at Oanda