Customers look at jewellery in the Deira Gold Souq
Customers look at jewellery in the Deira Gold Souq. The overnight increase comes at quite an inconvenient moment for resident shoppers. Image Credit: Atiq Ur Rehman /Gulf News

Dubai: UAE gold shoppers received a jolt when jewellery shops opened for business today (Thursday), with the Dubai gold rate for 22-carat set at Dh156.75 a gram. Wednesday's closing price was Dh152.75 a gram.

Thursday's rate is also the highest the Dubai gold rate has touched in five years. Further rises will dampen gold and jewellery demand in the UAE, market sources say.

The spike in local rates are in sync with the sharp movement in global bullion prices, which has now hit a five-year high after the US Federal Reserve indicated on Wednesday the possibility of an imminent rate cut. This has prompted global investors to seek alternate assets, and gold has forced its way back on the radar.

Gold prices had been relatively stable for the past five months, but the moment the Fed decides it will cut rates, the situation will change,” said Cyriac Varghese, General Manager at Sky Jewellery. “Every indication points to further rises for gold.”

Meanwhile, Bloomberg reports that bullion for immediate delivery jumped as much as 2.5 per cent to $1,394.11 an ounce, the highest since September 2013, and traded at $1,380.18 by 9:34 am in Singapore. Futures in New York climbed as much as 3.6 per cent to $1,397.70 an ounce, also the highest since 2013.

The metal has rallied since late May as investors seek havens amid slowing global growth due to the fallout from the US-China trade dispute and as central banks globally adopt a more dovish tone. While the Fed left its key rate unchanged on Wednesday, it dropped a reference to being “patient” on borrowing costs and forecast a larger miss of their 2% inflation target this year, which weighed on the greenback.