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.
Gold is off to a good start to 2022, but the price gains will disappoint shoppers. Image Credit: Reuters

Dubai: Gold prices did not wait long to fly off the charts early in the New Year, with early Monday international prices at $1,825 an ounce levels. That shows a gain of $20 an ounce since December 29. The Dubai Gold Rate is at Dh208.25 a gram, dampening jewellery shoppers’ hopes of some early in the year purchases at favourable rates.

For many UAE consumers holding gold jewellery, this is turning out to be a good time to cash out or update their collections. Jewellery retailers are pushing gold exchange promotions and offering discounts on manufacturing charges on any new purchase to keep shoppers/sellers interested.

December has been a relatively good month for UAE gold retailers, with tourist buying providing some much needed support. Plus, prices for the better part of the month was under $1,800 an ounce (around Dh202-Dh203 a gram in Dubai Gold Rate), and that was a level that clicked with shoppers.

“Tourists were driving the gold retail business since October, but the current Dh208-Dh209 a gram levels could be too high a level to buy at for most,” said a retailer. “The only way out is for prices to cool down soon.”

Another January high
Compared to January 1, 2021, today's rates are quite a discount. A year ago, gold was at eye-popping $1,893 an ounce levels, still fresh from hitting an all-time high of $2.074 in early August 2020.

Will prices drop?

Analysts suggest that there could be some resistance if international bullion prices touch $1,835 levels. A sharp drop to $1,750 levels is not rated as much of a possibility, for now.

Through the better part of 2020, gold prices had been in the $1,795-$1,810 levels, and by and large shoppers in the UAE had accepted the fact that they were unlikely to see sub-$1,700 levels any time soon. But anything over and above $1,820 will have them hit pause on any plans to buy.

“Resident shoppers have been inactive in the last 10 days of December as prices picked up,” said the retailer. “Tourist shopping compensated, but a rise of more than $20 on the ounce in five days will likely hit that too.”