UAE shoppers, jewellers worry after gold price forecasts revised to $3,600

Dubai: At Dh376.25 for a gram of 22K, the Dubai gold price continues to remain at one of the highest rates in the last 30 days – but shoppers and jewellery retailers are more concerned about what could happen next.

That’s because forecasts are being revised where global gold prices are headed – one of the big Swiss banks, UBS, estimates that this could reach $3,600 an ounce by March end next. This is $100 higher than what the bank had forecast earlier. The highest ever bullion price to date is $3,500.

“If the UBS forecasts prove correct, the Dubai gold price for 22K is headed for Dh430/Dh440 levels,” said a jewellery retailer in Dubai. “It will come as a severe blow to jewellery demand for a second year running.

“UAE resident-shoppers drastically cut their jewellery buying each time the local price goes beyond Dh360. How will they react to Dh430 in another 7 months?”

On Friday evening, gold shot up more than $40 to $3,370 an ounce plus levels after US Federal Reserve chief Jerome Powell hinted at a September interest rate cut. (Gold prices typically edge higher when interest rates are cut.)

The other factor that can push gold higher is what happens to the dollar. If the dollar weakens on rate cuts, that too will be a catalyst for more investors to get into gold. And when that happens, it will be no picnic for shoppers planning jewellery buys.

This is the concern that weighed on UAE jewellers over the weekend after many had even started hoping for gold prices to cool off if a deal between Russia and Ukraine is struck under US auspices.

In the next few days or weeks, the main lookout for gold is whether it will return to $3,400 an ounce levels. The next Federal reserve meeting is mid-September, and if a rate cut happens, expect gold to rise. (Now, the Fed could yet again delay a cut decision if US inflation remains high, especially with the tariffs in effect.)

Some UAE shoppers who need to make gold jewellery purchases because of weddings are ‘bringing forward their purchases’, say retailers. “These shoppers need to buy a certain weight of gold, and those purchases will go ahead whatever the price,” said a jeweler. “They too have seen reports of gold going to be higher – and don’t want to take chances.”