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.
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“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.
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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.
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“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.”
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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.
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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.
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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.
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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?”
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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.
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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.
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