Dubai: Is the Donald Trump arrest in the US setting off a gold rally? It sure seems like it, with gold shooting past $2,000 an ounce overnight after the arrest and formal charging of the former US President in New York. Gold is now running at a red-hot $2,022 an ounce, and a price that will immediately force shoppers in the UAE and elsewhere to hold back from any buying for now.
Gold was at $1,983 an ounce early yesterday. (Highest ever gold price remains the $2,067 on August 6, 2020.)
"Today's price shoot up is a complete shock even with gold ranging at high levels these past few days," said Abdul Salam K.P., Vice-Chairman of Malabar Gold & Diamonds. "We could see the pattern emerging in the moments after the formal arrest of Trump late last evening.
"The volatility will continue if the new US jobs report this week confirms there will be worries ahead for the economy.
The current UAE gold price for 22K is Dh224.25 a gram. (It was on August 6, 2020 that the local rate had been at its highest, of Dh235 a gram.)
This year's Akshaya Trithiya is marked on April 22.
What will worry UAE gold shoppers and jewellery retailers more is the Indian festival of 'Akshaya Trithiya' coming up later this month, and which is usually one of the peak buying periods for gold in the UAE. Jewellery retailers have already introduced price lock-in promotions ahead of Akshaya Trithiya - but with the current rates at Dh224 a gram levels, it's going to be a tough sell.
"Gold prices need to cool off for shoppers to feel confident about buying," said a retailer. "Whether it's the US economy or the Trump arrest, today's rates are way above anything that shoppers will want to touch. They need to wait for the next price slide."
Does it make sense to 'exchange'?
No one knows when that price drop will happen next. But there is still much gold shoppers can do, and which some of them have already done - exchange old for new jewellery. "Each time gold has been at above $1,950 an ounce, we have seen a steady trickle of shoppers come for exchanging their collections for new," said a retailer. "The shoppers is actually making gains on the price of gold, while the making charges would not have changed much from the time they bought and selling now."
According to rough estimates, gold bought just 5 years ago and being exchanged will make for a near $700 an ounce gain for the seller. (One ounce equals just over 28 grams.)
"If the current high price persists through April, the best option for shoppers would be to consider gold exchanges for their Akshaya Trithiya purchases," said a retailer. "Our hope is this 'Trump effect' gold price bounce will dip soon."
