STOCK Dubai gold shopping
Gold prices keep sizzling as tensions still remain rife on the Russia-Ukraine border. Image Credit: Ahmed Ramzan/Gulf News

Dubai: Gold shoppers in the UAE have lost their appetite for new purchases with the Dubai Gold Rate gaining nearly Dh10 a gram in recent days to Dh215.75 for 22K early on Friday. The international bullion price is now at $1,890 an ounce, but it was inching close to breaking the $1,900 level again late yesterday.

Jewellery retailers in the UAE report that shopper visits dropped drastically this week. “Resident-shoppers were slowly getting used to Dh200 a gram levels – to suddenly see that shoot up to Dh215 is scaring them off,” said a retailer. “Even tourists are playing safe at these gold price levels.”

Analysts are talking about gold's latest rush being strong enough to push it to $1,920 an ounce levels before some resistance crops up. 

Jewellery retailers have responded by offering one-off promotions by marking down their making charges. Even then, the response from shoppers have been dull. Unless there is a drastic drop in international gold prices as the Russia-Ukraine tensions ease, gold will likely stick to these elevated prices.

“Shoppers are not approaching even to exchange some of their holdings, because they feel they will still have to fork out more on a new jewellery set,” said the retailer. “We had four good months of sales, but February has been extremely tough.”

Wait for Akshaya Trithiya
'Akshaya Trithiya', a day which according to Indian tradition is auspicious to buy gold, will be marked on May 3 this year.

"If gold continues at these high levels, the jewellery business will have to wait until May to get some bounce back," said a retailer. "Anything close to $1,900 or over is going to make it difficult to convince shoppers to buy."

Sell this weekend?

Gold retailers expect to see some shopper activity this weekend, but that would be to sell rather than make any additional buys. “The last time gold reached Dh215 a gram, there was some heavy selling by consumers here,” said a wholesaler in the precious stones trade. “There were many who held back last week when gold was around Dh210-Dh211, but Dh215 should convince them.”

The highest point for gold in the UAE was Dh234-Dh235 a gram in late July/early August 2020, when the pandemic and the worries about the global economic situation turned bullion into the ideal safe haven. Gold reached its highest levels ever, at $2,067 an ounce.

Tensions need to cool before gold drops
"Investors are scrambling for safe havens over overly aggressive central bank tightening and rising geopolitical tensions. The $1,920 level will prove to be tentative resistance - but that might not last much longer. Gold's rally could continue as there probably won't be an immediate resolution to any of the major geopolitical risks, while inflation should run hot for a couple more months."

- Edward Moya, Senior Market Analyst at Oanda