Dubai: UAE gold shoppers who booked their ‘Akshaya Trithiya’ purchases in advance find themselves better off after the local gold rate surged by Dh5 a gram today. The UAE gold rate for 22K is Dh264 currently, after bullion prices surged by $50 plus to $2,358 an ounce overnight.
“All those who booked get to maintain the Dh258/Dh259 they booked at in recent days,” said Abdul Salam K. P., Vice-Chairman of Malabar Gold & Diamonds. “Fortunately, a lot of UAE shoppers did book in advance and locked in their purchase prices before today’s hike.”
This is the same message that other leading UAE jewellers are giving as their stores open and await what has traditionally been one of the biggest sales days for gold through the years. (Akshaya Trithiya is an Indian festival where buying gold or other assets is one of the key highlights. In the UAE, gold retail sales on the day accounts for 1 tonne or more, with even other resident shoppers making their own purchases.)
After the first hour of opening, UAE jewellers say the early shoppers are primarily those who made advance bookings. "It's too early to see walk-in customers or tourists to the shops," said Anil Dhanak, Managing Director of Kanz Jewels. "Whatever the price levels, gold buying during Akshaya Trithiya remains a significant cultural event."
Whatever the price levels, gold buying during Akshaya Trithiya remains a significant cultural event.
It's only in the last two years that UAE jewellery retailers have been promoting price lock-in schemes ahead of key sales days. Here, the shopper makes a booking when the gold price is at a certain level and with the full purchase made in 30 days or so. At the time, if gold prices had shot up further, the shopper still gets the price he or she booked at. If the price has dropped, they get the lower price on that day.
Following a period of consolidation, we have now seen gold prices take a technical break to the upside, supported by signs the US labor market is cooling. Together with inflation being controlled, it has lifted the expected number of US rate cuts to two from one
What's behind today's price spike?
The latest tensions around the Gaza situation is the prime reason behind gold suddenly putting on the $50 plus on an ounce basis. (One troy ounce equates to 31 grams.)
By 03:15pm, bullion was at $2,373, and still showing no signs of slowing down. "The price rise has everything to do with renewed global anxieties over the Middle East situation," said Salam. (Malabar had opened its price lock-in schemes for Akshaya Trithiya from March 1, rather than the typical one-month gap from past years. This was in reaction to sustained price rises for gold since the start of the year.)
Check out gold's movements of late
- Prices hit $2,100 on December 4, 2023, but then dropped.
- It again clear $2,100 on March 4, 2024 and closing at $2,114.
- It touched $2,200 on March 21, and closing slightly lower at $2181.
- On March 28, gold surpassed $2,200 again, closing at $2,232.
- The $2,300 mark was reached on April 3, closing at $2,299.
- And then, gold surged to $2,400 on April 12 before closing at $2,343. It crossed $2,400 again on April 19.
Given these patterns, a run all the way to $2,500 an ounce cannot be dismissed.
As for today's hike, "Prices rose to $2,369, breaking the $2,350 resistance due to weak US economic data, strong demand from India and China, and expectation of a US Fed interest rate cut," said Vijay Valecha, Chief Investment officer at Century Financial.
"The US initial jobless claims surged to 231,000, suggesting a slowing economy and leading markets to anticipate two interest rate cuts this year. This is good news for gold as it's a non-interest-bearing asset."
Gold prices have rise to $2,369 today and breaking the $2,350 resistance levels due to weak US economic data, as well as strong demand from India and China
More to follow...
