UAE investors split over buying more gold - or sell before prices drop

Dubai: Buy or sell gold at current prices?

UAE investors trading in ‘digital gold’ are evenly split between those who want to buy more gold and those who believe they are better off selling and booking a profit.  

Gold prices are stuck at $3,300 an ounce levels and had been trading in a tight $3,320-$3,340 range in recent days. (This is also reflected in the Dubai gold rate, which is currently at Dh371.25 a gram for 22K.)

The best part is that this is the first months in weeks that gold prices have remained relatively stable. But that also brings doubts among gold investors whether they should sell and pick up some neat profits. And they do have concerns that by holding on, gold prices could drop and they will have missed their ‘moment’.

“Gold has come under pressure as the dollar extends its recovery,” said a senior analyst at the trading platform IG. “Traders now see less chance of a big Fed rate cut - and the recent selloff in the broader markets has sparked demand for cash, which by default weighs on gold.”

In the last 30 days, gold’s down by nearly $30 on an ounce basis, after earlier being down by $100. This is what got investors thinking of booking profits by selling some of their holdings.

Right now, investors on IG are roughly 50:50 between buyers and sellers of gold based on recent fund flows. This is the same pattern being seen on some of the other trading platforms too. (When it comes to physical gold, UAE shoppers are exchanging jewellery to buy gold bars, bettering their chances at investment income.)

Many gold analysts suggest that there is no need to rush to dilute gold holdings. "The next 4-5 days will provide some indication of where the asset is headed, starting with what happens after Fed's Jerome Powell's speech at Jackson Hole later today," said one analyst.

"There is no chance of gold prices going into a meltdown - that's not a scenario in anyone's books."

Other analysts say that the 'ideal' option for UAE investors would be to sell some of their positions on gold and free up some cash for themselves. "Once they have cash in hand, they have a better chance of deciding what to do next," said the analyst.