Dubai: Dubai: Gold prices are back on a wild ride, dropping $17 to $1,776 n ounce levels on Thursday evening. This comes after having a breakout session in early morning trade gaining $25 to $1,790 an ounce range.
Gold dropped after US labour market data showed employers added more jobs in July than forecast, an indication the Federal Reserve may press on with steep interest-rate hikes to thwart inflation.
But the bottom line for UAE shoppers remain the same - gold at current levels is still too hot.
The gold shoppers’ honeymoon phase is over for the moment, according to those in the gold and jewellery retail sector. “Shoppers have the numbers before them – Dubai Gold Rate for 22K had been at Dh192 levels just days ago,” said a retailer. “No one will have an appetite for more gold buying when it’s now at Dh203 and slated to go higher today.
“At these prices, UAE resident-shoppers will prefer to stay back.”
A time to sell gold?
Market sources say those with gold holdings are far better off waiting for further appreciation – and that’s going to come as, by the day, there are more signs that the global economy is slipping into a recession. (Gold prices shot up to then record highs of $1,920 levels in 2011 after the 2008-09 Global Financial Crisis. In the last two years, there have been two phases when gold shot past $2,000.)
Gold futures
In fact, forward contracts on bullion already show prices pegged to $1,806/oz, as global investors head back into the metal for its safe haven feel. (Rule of thumb: When investors get in, gold shoppers will always find it difficult to get favourable pricing.)
Gold continues to rally as geopolitical tensions won’t be going away anytime soon and as central bankers worldwide brace for recessions.
Tourist return
In many ways, UAE jewellery retailers are still OK with what their August sales would be. Those who had booked when prices were at or below Dh195 a gram would be making the sales transaction this month (at those rates). Plus, retailers say a lot of orders had come in from residents and from overseas clients for wedding/event related purchases during the coming weeks or months.
“As for tourists, we will need to wait another 30-45 days; with those shoppers, prices of Dh205-Dh210 a gram are still seen as favourable for buying,” said a retailer. “And we can hope global tensions recede by then.”
UAE resident shoppers definitely would like to see gold back under Dh200.
