Dubai: Gold shoppers in UAE be warned - this could be another day of price spikes. In early trading on Friday, gold pushed past $1,630 a tonne, easily the highest point since 2013. And by the looks of it, will continue to push higher. (At 5.21pm, it was at $1,642, up by more than $25 since the start of the day.)
In the UAE, a 22K gram was at Dh183.75 early Friday, but immediately saw a raise - to Dh185 - when the first rate set for the day was announced at 9am. It was revised to Dh187.25 in the afternoon. (The Dubai Gold Price is reviewed four times a day.) "We were hoping prices would soften on Friday after breaking $1,600 level on Thursday - only the second time this year," said Cyriac Varghese of sky Jewellery. "But clearly, that's not happening - let's hope something happens to cool things down for gold."
In the last 30 days, gold's gained more than $50 an ounce.
So, what should gold be doing to head back to saner levels, say under $1,600 an ounce? Find a cure for the coronavirus... or failing that, for the epidemic to lose some of its virulence.
“There’s a fear the virus will play havoc with global economy in the coming quarter, and that China will find it difficult to recover from its impact,” said a gold trader. “This is why gold is seeing a rush of investments - by central banks, funds, etc., and that’s pushing it higher.
“It’s going to make life difficult for shoppers - $1,700 an ounce isn’t looking that far away.”
The irony is that two of the world’s biggest consuming markets for the metal - China and India - have seen a sharp decline in buying activity since the start of the year.
"Gold continues to see the bulk of haven demand as investors are showing little fear in the face of another massive position build," said Stephen Innes of Axicorp. "The ability of gold to forge 7-year highs in the face of a slowdown in the number of new coronavirus cases, a rising dollar, is a testament to its newfound status as a quality asset."
$1,700 and above
So, when was the last time gold shot past $1,700? For that, one needs to go back to 2012. At those levels, and in a tough economy, shoppers are not likely to be making any heavy purchases.
For jewellery retailers, even as they scan daily trades in bullion, their focus also extends to April 26, 2020, which is when the Indian gold buying festival of “Akshaya Trithiya” is celebrated. It’s one of the key dates in the jewellery calendar, with a single-day sale often offering a month’s worth of bonanza for retailers.