Upward curve likely to continue
Gold price movements have been particularly frenzied in recent weeks
Dubai: Paper currencies may be showing signs of weakness, and none more so than the euro, but expect no such thing from this ‘hard' currency. Gold prices, local retailers concur, will only be heading in one direction in the short term and that's up.
"We reckon it will touch Dh200 a gramme by mid-2011 (from the current Dh130 plus range)," said Tomy Joseph, general manager for marketing and business development, Joyalukkas. "From this vantage point, the trade sees no reason at all why gold should not be touching those heights and staying there. There are no limits to the upsurge."
Gold price movements have been particularly frenzied in recent weeks, but has had little or no impact on retail demand in the local marketplace. A case in point was the level of demand generated during a two-day timeframe in mid-May. The two days coincide with an auspicious period Akshaya Trithiya where buyers from the subcontinent tend to make investments in the metal or jewellery made from it.
"This year we saw movement of 230 kilogrammes in those two days and more or less on par with what we did last year," Joseph said. "But the key difference is that gold costs Dh37 a gramme more this year. Where buyers are concerned, they have taken in the higher prices in stride and realise this is only going to go up."
Sales play up
Similar patterns of demand and sales were played out across gold and jewellery outlets in Dubai during the two days of May and through the rest of the month as well. Gold started the year at Dh123.25 a gramme as against Dh99.75 on January 1, 2009.
"Gold's upward trajectory is built on fundamentals as there are widespread concerns about euro's weakening position and over the state of the global economy," said Shamlal Ahmad, managing director for international operations, Malabar Gold. "What these events do is solidify gold's status as a hard currency."
With interest from European tourists on the softer side — a scenario that incidentally was witnessed across all of the key retail sectors — the bulk of the demand for the metal and its many forms has come from domestic and Gulf buyers.
