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International gold prices dropped by another $10 to $1,864 an ounce, and possibly setting up hectic buying interest today and over the rest of the weekend in the UAE.
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Since September 18, the bullion prices are down by around $70 on an ounce basis, and it’s all showing up in the UAE Gold Rate.
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In the UAE, the first retail gold price for the day has been set at Dh209.25 a gram on 22K, down by more than Dh7 in recent days, in what jewellery retailers say are levels that UAE gold shoppers can be comfortable with.
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With resident shoppers, ‘It would be more of exchanging the gold they have rather than buying new,” said a jeweller. “Frankly, no one would have been expecting such a steep decline from the $1,930 levels that were there just last week.”
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In value terms, exchanging the old for new would represent the easiest option for shoppers this weekend.
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All they need to keep in mind – if they are exchanging gold they bought 5 years ago, they would be benefiting to the tune of around $670 on an ounce basis. (And 1 ounce is 28 grams.)
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Since Thursday (September 28) evening, tourist shoppers were already doing the math in their minds and making up a good part of the buying at Dubai Gold Souq and elsewhere.
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Tourist buying represents the best potential scenario for gold retailers. There’s less of gold exchanges involved, with these shoppers preferring to buy new.
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Tourist buying represents the best potential scenario for gold retailers. There’s less of gold exchanges involved, with these shoppers preferring to buy new.
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Each time gold seemed headed for lower price levels – and staying there – global events have conspired to push them back to $1,900 and over. There is no guarantee, at least for now, that this will not happen again.
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So, if UAE resident shoppers do have plans for a round or two of gold buys, they should be taking those decisions fast.
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Chances are that jewellery retailers will bring forward their Diwali and Dhanteras promotions forward. If that happens, then the cost of buying new will come lower for shoppers now.
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Or they can just call in to lock their prices at current levels, and buy closer to Diwali. If prices go up, they are protected.
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If prices were to drop further, it would mean they only need to pay the lower rate.
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If the last 3 years have shown anything, it’s that gold prices are kind of sticking to those elevated levels. Compared to the last 10 years, even anything above $1,800 an ounce would be on the higher side.
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But with gold, there’s always a payoff. Plus, all the emotional aspects related to laying hands on a piece of finely crafted jewellery.
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That moment can be priceless.
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This weekend will show whether UAE gold shoppers are making those decisions with their hearts or cool calculations...
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