Will shoppers in the UAE still go ahead with their traditional gold buying during Eid? Even a few grams as a token purchase? Image Credit: Virendra Saklani/Gulf News

Dubai: This Eid, gold prices are in no mood to give shoppers any let off.

Any shopper in the UAE still willing to make a gold purchase today for Eid will be paying the highest ever on a gram basis. Currently, the UAE gold rate for 22K is Dh261.25 per gram, and that’s yet to factor in the further shooting up gold prices are having in the global metals markets.

For early Monday (April 8), the UAE gold rate is set at Dh262.5 a gram for 22K.

This morning, the ‘safe haven’ asset is at $2,343 on an ounce basis, putting in another $30 plus gain in the last hour or so. There was a brief period when it looked like it was heading towards $2,310 levels, but that drop stalled almost instantly. Now, it’s all up and, by the looks of it, ever higher.

“Gold prices are reaching new peaks that would earlier take months, even a year, for it to happen,” said a jewellery retailer, who says that his Eid demand will be cut by well over 60-70 per cent if the current levels persist through the week. “Most shoppers are in the mood to delay their purchases – they feel whatever budget they have on gold will not get them anywhere near the grams they were hoping to buy.”

Saudi and other GCC tourists spending their Eid holidays in UAE will definitely be buying some gold, retailers say. “Because gold buying during Eid is a habit for them, and there is also the fact that they don’t have to pay any VAT for it in the UAE,” said one retailer.

“We are certainly hoping that tourists from India and other Subcontinent countries will still buy a few grams worth of gold. Here too, the zero VAT for overseas shoppers will work to UAE gold jewellers’ advantage.”

Awaiting a price drop?

The way gold prices are behaving, even if there is a correction in the global markets this week, it could still leave them at too elevated a level for shoppers. Over recent days, any price dip has been limited to $10 or so on an ounce basis. In UAE gold rate terms, that's hardly enough to make much of a change.

In the last 10 days, UAE gold rate has stuck to Dh250 a gram plus levels.

So, can a correction happen? In the short-term, chances are that gold will drop, though not necessarily by much.

If the current momentum lasts, it could lead to '$2,385, while above this would most likely target $2,425', says a new update issued by Kamco Invest, the Kuwait entity. It does add that some correction could still happen short-term.

At $2,400 an ounce levels, the UAE gold rate would be in the region of Dh270 a gram and well over. "There will come a time when today's Dh262 might seem like a good price to buy at," said a jeweller. "Only problem is that UAE shoppers are still thinking that rates of Dh200-Dh210 of last year were too high."