Dubai Gold Rate drops Dh8 a gram in one day - and shoppers get interested

Dubai: UAE gold shoppers responded immediately to prices dropping below $1,800 an ounce on Thursday (June 17), and with the Dubai Gold Rate sliding by nearly Dh8 a gram for 22K. It is the first time since end March that gold has come under pressure.

“There was a 10 per cent increase in shopper numbers on Thursday from a week ago – and all of it had to do with the all-day decline in gold prices,” said Abdul Salam K.P., Executive Director at Malabar Gold & Diamonds.

Others in the local gold and jewellery market are equally hopeful that shoppers will return if gold remains in the sub-$1,800 levels, and could rise sharply if the local rate declines to Dh190-Dh195 a gram.

“Typically, UAE gold shoppers check whether prices will drop further for a second consecutive day before deciding whether to buy then or later,” said a retailer. “This time, if Friday sees more declines to $1,770-$1,775 levels, we can expect a decent turnout for the weekend.”

Gold is now at $1,785, while the Dubai Gold Rate is Dh203 a gram. Early on Friday, it was showing some strength, gaining $8 an ounce in the international markets.

The immediate reason for Thursday’s drop was the US move to increase its interest rate, and which led the dollar to strengthen. Higher interest rates are always a signal for global investors to move away from ‘safe haven’ assets such as gold and chase better returns elsewhere.

The lowest Dubai Gold Rate so far this year has been the Dh191.75 a gram on March 31. That was also the last time UAE gold shoppers engaged in some fairly decent buying activity.

But the times are such that buying patterns are changing. “In past years, summer would always see increased activity before Subcontinent residents headed for their vacations,” said Salam. “This year – and in 2020 too – a lot of them will remain in the UAE because of the COVID-19 related flight situation. Would this prompt them to buy less gold?”

Should the gold drop continue in coming days, those residents not taking a trip could well use those savings to stock up on gold. A drop to under Dh200 a gram for 22K is what they should be looking for.

If they get lucky, a drop all the way to Dh190 could also be a possibility. That’s when jewellery retailers will get all the sales sparkle they want.