Gold jewellery on display in Dubai. Gold is expected to scale new heights with global stocks set on a downward spiral. Image Credit: Pankaj Sharma/Gulf News

Dubai: Although today’s gold prices are cheaper than last Wednesday, precious metal fans in Dubai are actually paying more on jewellery than they did in the beginning of the year.

During the first six months of 2017, the bullion soared in value, with the price of 24K gold alone going up by 10 per cent, from Dh139.50 per gram to Dh 153.50 per gram. That’s a whopping Dh14 increase per gram compared to January 1 prices.

Also as of 10am Sunday, 22K gold was trading at Dh144.25 per gram, up by Dh13.25 from Dh131 per gram in the beginning of the year.

Gold’s price performance so far has been consistent with previous predictions that the metal could fare better in 2017 due to uncertainties in the Eurozone and increase in uptake in the Asian market.

“Demand for gold as a diversification tool and hedge against political or economic event risks remains,” said Ole Hansen, head of commodity strategy at Saxo Bank on Sunday.

On Wednesday, total holdings in gold exchange-traded funds increased by 14.5 tonnes, the biggest one-day increase since last July, Hansen said.

“Total holdings have now recovered half of what was dumped in the aftermath of Last November’s US presidential election.”

Hansen said they maintain a positive outlook for gold, but he sees the short-term risk skewed towards a correction, initially towards $1,265 an ounce.

“Only a break below $1,245 an ounce (61.8%) is likely to attract accelerated selling as seen after the failed April attempt to break above $1,300 an ounce."

"Above $1,300 an ounce, gold is likely to target $1,315 ahead of the November 9 high at $1,337.“

Karim Merchant, group CEO and managing director of Pure Gold Jewellers, said gold is expected to remain volatile over the next coming weeks.

"In intraday trade, gold will remain volatile over the next coming weeks with eyes on political tension in the UK and economic data expected from developed economies. We expect gold to be in range bound of $1,230 to $1,285 over the next week," Merchant said.