Stock-Gold-(Dubai)
The UAE gold rate was always looking good to break the Dh300 mark during the current rally. And it finally has happened. Image Credit: Bloomberg

Dubai: The UAE gold rate for 22K has finally touched Dh300 a gram for the first time ever, as the asset continues to seek another record high.

Through the last 10 days, gold has risen from Dh292.50 to this morning's Dh300.25 a gram. The 22K version is the most popular gold variant for investors and jewellery shoppers alike.

Click here for historical gold rates

"If anyone had said even a year ago that the Dubai/UAE gold rate for 22K would ever be 300 a gram, no one would have believed him," said Abdul Salam K.P., Vice-Chairman of Malabar Gold & Diamonds. "The concern now is when gold price gains would stabilise, or would it go even further than $2,700 to $2,800."

Diwali and Dhanteras demand

The bullion rate is at $2,683 an ounce just short of the all-time high of $2,685, which was in September last. 

"After gold shot up by $30 an ounce in the last few hours, it was always on the cards that the UAE gold rate would be hitting Dh300 a gram," said a jeweller. "For gold shoppers, this is the most inopportune time for gold prices to be setting records, with the Indian festive occasions of Dhanteras and Diwali coming late this month."

Diwali and Dhanteras are usually peak buying periods for gold and jewellery.

At the start of the month, there were some signs that gold prices may be cooling off, but it soon reversed course on its current path of aiming for more highs.

This surge reflects real demand for gold rather than just currency dynamics.

- Dilin Wu of Pepperstone
$2,700 by October end?
How long will it take gold to get to $2,700 an ounce? "I believe the $2,700 level is well within reach before the end of October," says Dilin Wu, Research Strategist at Pepperstone. "Gold bulls are gaining strength, (with) uncertainty surrounding the US economic outlook continues to drive up gold prices."

Jewellery retailers also worry if this situation continues it could also hurt demand for wedding related purchases, with October to January being a peak period for that. "Overseas visitors wanting to buy jewellery here will see the cost of gold and expenses on airfares and hotel stays and think they are better off buying in their home country," said a retailer.

"We will see the likely trends soon enough, and our best hope is there will be some cooling off between now and October end, which is when the Diwali buying will happen."