STOCK Dubai gold shopping
Time to pick up? UAE shoppers want to ride out the current volatility in gold prices before making a commitments for their favourite metal. Image Credit: Ahmed Ramzan/Gulf News

Dubai: Local gold prices will need to drop to Dh185 a gram or below for UAE shoppers to rush back to buying their favourite metal.

“Shoppers need to see a drop to a new level to be convinced there’s value in buying at that price,” said a jewellery retailer in Dubai. “Any price drop to under Dh190 could convince them – but the best outcome would be if and when gold drops to under Dh185.”

For the record, Dubai rates for 22K were at or around the Dh170 a gram mark in March last year, which was the lowest point in these 12 months. 

Gold’s been under some pressure in recent days in the international metals market, but on Thursday morning has shot up by nearly $30 to head back to $1,709 an ounce levels. In Dubai, the overnight price for 22K is Dh193.25 a gram, and that could see an increase by Dh1 or so when the new rate for this morning is set at 9am.

Even with the recent price drop, there was no rush to the shops, according to gold industry sources in Dubai. “The store traffic in these days was just about steady, there was some pick up during the ‘Holi’ day – but on the whole shoppers have gotten used to gold rates of Dh194-Dh196 a gram.

“The impression is that gold prices could come down and test minus Dh190 levels – UAE shoppers are waiting for that to happen.” (The Indian festival of Holi was marked on March 28.)

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Will prices drop?

Despite Thursday’s spike, gold industry watchers reckon that international prices could fall to around $1,660-$1,680 an ounce levels. If that happens, Dubai gold rates could range in the Dh185-Dh188 a gram. And that would be the decisive point for shoppers and jewellery retailers alike.

Through the last six months, gold buyers have retuned only for special buying occasions such as the ‘Diwali’ and ‘Dhanteras’ festivals or for the end-of-year gifting occasions. Through most of this period, gold was in the Dh200-Dh208 a gram range.

The upcoming World Gold Council first quarter 2021 numbers will provide an accurate indication of demand patterns for retail level gold and jewellery buying.

The next big buy date
UAE shoppers will be hoping that gold prices would drop to slightly more accessible levels by May... and especially by May 14.

That's when the Indian festival of 'Akshaya Tritiya' - the Indian festival rated as most auspicious to buy gold or other assets - falls this year. "It's the one major occasion customers as all as retailers look forward too," said Cyriac Varghese, General Manager of Sky Jewellery.

"Buying is assured during those days - but any additional drop in prices will mark a sizable improvement in volumes."