Enticing displays, but UAE gold holders are turning net sellers. They are making substantial gains from doing so. Image Credit: Gulf News Archive

Dubai: Gold prices are not sticking to any deadline. Through August 4 and early trading on the 5th, it shot past $2,000 an ounce, zoomed to $2,028 and then dropped to $2,014. Then through Wednesday afternoon, it headed past $2,040 and more or less stayed there. At least for now. 

All this when many in the industry was thinking that the $2,000 an ounce mark would only happen in September.

For UAE citizens, this is another chance to make gains on their gold holdings. And this week could well see such a spike in gold-for-cash sales. Gold is now at Dh227.5 for 22K.

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“Such transactions are already happening in India, and will also take place in the UAE/Gulf,” said Cyriac Varghese, General Manager at Sky Jewellery. “Activity was muted because of the Eid holidays, but consumers coming in to sell will definitely pick up in the coming days.

“On an ounce basis, gold is already up by more than $460… and in the last 30 days alone, it’s up by $236. The sentiments are to cash out and not to buy.

"Normally, pivotal reasons trigger gold price at such a pace - but this time it is entirely pandemic-related. Prices heading solely in one direction is quite unprecedented - and alarming like the COVID-19 itself."

Tricky times

For UAE jewellery retailers, the rise and rise of gold prices is pushing them into unchartered territory. All of their talk about gold being the ultimate safe asset has come true – but at these prices, will there be enough shoppers?

Some in the industry believe that gold’s in with a good chance to head up to $2,300 in this run. But what after that?

“If prices were to show some declines in the next few days/weeks, it would convince some buyers to invest,” said a wholesaler. “But so far the momentum is only in one direction – up.”

From $1,770 range in the first week of July, gold sprinted to a then record of $1,921 in two to three weeks and on August 4 surpassed the $2,000 milestone

- Cyriac Varghese of Sky Jewellery