Dubai: The UAE gold rate has dropped by Dh5 drop on a gram of 22K in 10 days – this could well be the next trigger to get another round of demand coming in for jewellery. Early Tuesday, the local rate was set at Dh185.75 against the Dh187.25 from last evening. It was Dh190.75 on September 18.
“Anything close to Dh185 a gram would be a major boost – these are levels not seen for more than two years,” said a retailer. “Currently, tourists are the biggest buyers as well as visitors from the other Gulf states.
“If these rates hold until the next salary credit, which would happen in the next 3-4 days, we expect resident shoppers too to turn up in numbers. Fingers crossed, next weekend would be among the busiest, if gold rate remains in the Dh185-Dh187 range.”
Anyone checking bullion prices right now will find that it has dropped by over $14 to $1,629 an ounce levels. (Current price is at $1,634.)
With the pound at historic lows to the dollar, there's talk of a BoE rate hike, an imminent one at that. That could, among other things, halt gold's slide.
A similar thing played out last month after the European Central Bank and BoE hiked their rates. Immediately, bullion prices shed their weakness and ratcheted higher by around $30 dollars on the ounce within hours.
Shoppers looking for deals this week should be on the watch for any such central bank induced changes to gold.
Online channels are busy
The ecommerce channels operated by leading gold and jewellery houses in the UAE are recording a lot of activity. Residents awaiting their next salary are not wasting time and instead making an online booking. “They pay 10 per cent upfront and then make the actual purchase later, in 30 days,” said a retailer. “This way they are in the best position to make full use of gold price drops.
“There are online orders coming from overseas too, with the buyers confirming there will be someone coming to the stores within the period pick up the jewellery. In this kind of price volatility gold has been seeing, Dubai and the UAE are the best places to buy.” (It’s also easier for visitors to reclaim their VAT funds, with all of the process now getting done digitally.)
As is happening with most global currencies, gold prices too are dropping on the dollar’s surge. Earlier, it was expected that gold would stabilize at $1,650 levels and then head up. That’s not how it’s shaping up – now, the question is will the current pressure push it to $1,600? (The last time gold was anywhere near $1,500 was in late March 2020.)
One analyst reckons gold still has room to drop. “The move in the dollar is not over and that should keep the pressure on bullion,” said Edward Moya, Senior Market Analyst at Oanda, the consultancy. “Gold is struggling in this environment as many investors are getting very tempted at 2-year US Treasuries (which are at 4.27 per cent currently). The dollar is up 18 per cent this year and this rally won’t be over until the peak in yields is in place.”
