By the looks of it, this will not be the summer of gold. After briefly pushing below $1,800 an ounce, and looking as if it would test $1,7950 levels, gold has zoomed to $1,825 and thereabouts on Friday (July 16).
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In the last 30 days, gold is up a $52.87 – and that’s never a good outcome for shoppers. The lowest point for gold – from a shopper perspective, at least – has been the $1,684 on March 30, 2021. Since then, it has remained above the $1,700 mark.
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Even the drop in June was halted at the $1,764 mark on June 17. For the average gold and jewellery shopper in the UAE, that’s way too high.
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“Shoppers here will get comfortable with buying again only if the Dubai Gold Rate drops to the Dh180-Dh190 a gram range for 22K,” said a retailer. “At the current Dh207 level, you will not get the budget conscious gold shopper to come into the store.”
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Tourists are yet to show up in significant numbers. Each time gold rates slipped this year, nearly all of the buying support have come from residents.
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“The price softening lasted for a week to 10 days – and then they started climbing back to crush whatever demand might have been there,” said the retailer. “It’s clear that plus $1,800 levels are out of the comfort zone for most residents. Even if tourists return, it may not help much – most of the currencies in the Subcontinent are under pressure against the dollar, and will make gold buying here too expensive.”
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Will gold prices retain their hot streak? No one is thinking of it shooting past $2,000 again – at least not immediately. It was on August 6 last year that gold hits peak, of $2,070.
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The Dubai Gold Rate on August 7 was an eye-popping Dh233.75 a gram. That and anaemic shopper demand during the fourth quarter was enough to turn 2020 into the worst year for the local gold and jewellery sector.
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This year will turn out to be slightly better – but prices need to slip below $1,800 and closer to $1,700 levels for real demand to turn up at local stores. “If gold rate was below Dh200 a gram, we could have picked up some sales from those residents who are not flying out this year,” said the retailer. “Saving on travel expenses could have easily been turned into savings in gold.”
Image Credit: Clint Egbert/Gulf News
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