Gold prices spike in Dubai – but can UAE buyers expect a dip?
22K gold now priced at Dh378.5 a gram, 24K gold back above Dh400, at Dh408 per gram
Dubai: Gold prices in Dubai have recently surged to a 10-day high, with the 22K gram now priced at Dh378.5. The 24K gold price is back above Dh400, at Dh408. This price increase is happening as many UAE residents, particularly expats, are still weighing their options on buying gold jewellery before heading home for summer vacations.
To put things into perspective, the last time we saw a price as high as today’s was back on June 2, when 22K was priced at Dh376.50 a gram. (Check the latest Dubai gold price here.)
For UAE buyers, this price point raises several questions: Is now a good time to buy, or should they wait for a price drop? In comparison, India’s gold prices have also been rising, with one tola (12 grams) priced over Rs107,440. Meanwhile, gold in Saudi Arabia is priced around Dh380 for 22K.
What’s driving the gold price surge?
The recent increase in gold prices is largely linked to global factors. One key contributor is the ongoing speculation surrounding the Federal Reserve's plans to reduce interest rates in the United States. A recent softer-than-expected US inflation report has strengthened the likelihood of interest rate cuts later this year. When interest rates fall, gold tends to benefit as it does not offer interest, making it an attractive alternative investment during uncertain times.
However, experts are cautious about the direction of gold prices. Ole Hansen, Head of Commodities Strategy at Saxo Bank, noted that while a rate cut could send gold higher, it would take further deterioration in economic data for prices to break away from their current range.
What this means for gold buyers in the UAE
For UAE residents looking to buy gold, it’s crucial to keep an eye on the following trends:
Price resistance at Dh370: Local retailers have noted that there’s a psychological barrier for buyers when 22K gold hits Dh370. Anything above that price tends to lead to a significant dip in demand. Many are hoping that, like after June 2, the price will slip back below Dh370 in the coming weeks.
Interest rate cuts and price movement: The Fed’s potential rate cuts in the US could lead to more volatility in gold prices. Historically, gold prices tend to rise in response to low-interest rates as investors seek safer investments. If the Fed does act soon, UAE gold prices could see another spike.
Global tensions and gold’s safe-haven appeal: Uncertainty in the global economy, especially due to ongoing trade tensions, is keeping gold in demand as a safe haven. As the global economic picture remains unclear, the demand for gold as a store of value has surged, pushing prices up year-to-date by nearly 27%.
What should UAE gold buyers do?
If you're an expat in the UAE considering buying gold jewellery or making an investment, there are a few things to keep in mind:
Watch for price dips: Historically, gold prices tend to dip back under Dh370 after a surge. It may be worth waiting for a slight price correction before making your purchase.
Consider future price fluctuations: While gold is seen as a hedge against inflation and economic instability, it’s important to be aware of how the Federal Reserve’s policies could influence the market. A sudden dip in gold prices could follow any unexpected shifts in US monetary policy.
Don’t rush decisions: With ongoing global uncertainties, gold's price will likely remain volatile. If you’re not in a rush, consider waiting for a more stable market before making large purchases.
The bottom line is, while gold has surged in price recently, it remains to be seen if these gains will continue or if prices will dip back below the Dh370 level. For UAE buyers, keeping a close eye on global economic shifts, especially interest rate cuts and trade tensions, will be key to making a smart purchasing decision.
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