A saleswoman selects gold necklaces in a jewellery showroom in India
A saleswoman selects gold necklaces in a jewellery showroom in India. [File image used for illustrative purpose] Image Credit: Reuters

Dubai: After prices went to five-month lows on Monday, the precious metal has had a rebound of 0.5 per cent to $1,785.10 per ounce today. In UAE rates, this translates to Dh6,558.29 for an ounce and Dh204.25 for a gram of 22K gold.

While still low compared to the price 10 days ago, at 212.75 on November 22, the price of gold has gone up by almost Dh2.5 per gram since last evening. The prices had started falling largely due to the positive news around vaccine efficacy by at least three companies. Gold clocked its worst monthly fall in four years on Monday, falling to $1,764.29 per ounce, the lowest level since July 2.

Despite the rising hope of getting the vaccines approved, gold prices has had a rebound following COVID-19 spurt in various countries. For instance, the total number of coronavirus cases in the United States for November surpassed 4 million Saturday, more than double the record set in October of 1.9 million cases. And the sharp escalation is likely to continue - or grow even steeper.

Germany, once a beacon of hope in Europe’s coronavirus nightmare, logged more than one million cases on Friday. The pandemic is spreading fastest in Asia and Latin America, and is up by a worrying 113 percent over the past week in Mexico.

All of this has affected the global economic outlook, leading to an increase in gold prices. However, some reports suggest that gold may not be the only safe haven investors are looking at amid the COVID-19 pandemic.

Bitcoin vs. Gold?

Bloomberg reported that Bitcoin shot to a record just as billions of institutional dollars fled gold. Whether that's a simple coincidence or the start of a rotation that would have a profound impact on crypto and the precious-metals market is impossible to know for sure.

But the debate is now heating up, on whether the world's largest digital currency can one day rival bullion as an inflation hedge and portfolio diversifier. "Gold was really the safe asset of the past world and baby boomer generation," said Jean-Marc Bonnefous, a former commodities hedge fund manager turned crypto investor, to Bloomberg. "Now it's being replaced by automated assets like Bitcoin."

One thing that's clear is Wall Street is taking Bitcoin seriously in a way that it didn't in 2017. "I have changed my mind!" wrote Sanford C. Bernstein strategist Inigo Fraser-Jenkins in a report Monday. Bitcoin won't replace gold, but there's room for both, he said, especially if the future is one of inflation and extreme debt levels.

- Inputs from agencies