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It was in early August of 2020 that gold shot past $2,000. Can it do so again? Image Credit: Shutterstock

Dubai: Gold going back to $2,000 an ounce?

“The question is how far it can go,” says Craig Erlam, Senior Market Analyst at Oanda, a FX and commodities consultancy. That, according to him, depends on how long the Russia-Ukraine conflict continues to play out and “how severe the sanctions against Russia become.

“At the moment, it’s looking like a case of when it will hit $2,000 rather than if - but a sudden and unexpected ceasefire would surely change that. One can only hope.”

It was in August of 2020 that gold pushed through past $2,000, as the global economy fixated on how best to counter the devastating impact of COVID-19.

He isn’t the only one talking up gold’s chances. In recent days, gold has off and on pushed close to $1,950 before retreating. It is now at $1,928 as investors keep piling into the ultimate safe-haven asset.

“Inflation and risk-aversion are the perfect environments for the yellow metal and we’re seeing plenty of both at the moment, which is unlikely to change,” said Erlam.

Shoppers have no say

In the UAE, the local gold rate is at Dh219 a gram for 22K as against the Dh223 on February 24, which was the opening day of the attack. Since mid-February, gold sales at local gold and jewellery shops have dropped drastically. Shoppers seem to be thinking alike – Stay well away for now.

“Shoppers realise they are better off for the next dip, anything that takes gold close to $1,800-$1,850 levels,” said a jewellery retailer.

Will the Fed change that?

The US central bank again affirmed that an interest rate hike is on by mid-month, and that could cool the passion for gold among investors. Even then, it is unlikely that gold will fall below $1,900 until some resolution is reached on the Russia-Ukraine front.

Until then, gold will keep $2,000 in its sights.