Dubai gold price sticks to high level for weekend as 'smart money' goes into bars
Dubai: Anyone shopping for precious jewellery this weekend will find the Dubai Gold Rate is just Dh1 lower than the record Dh372.25 a gram for 22K hit on April 16. And on the 24K gram, it's back to slightly over Dh400.
This will come as a disappointment for those shoppers who had been hoping that prices would remain under Dh370 a gram for 22K, as it did for the better part of yesterday (April 18). Even at current never seen before levels, there are still UAE based shoppers who picking up gold – and they are 'smart money' into gold bars and, if not, coins.
'There are shoppers who would never have thought of buying anything other than gold jewellery now insisting on buying gold bars,' said Shamlal Ahmed, Managing Director of Malabar Gold & Diamonds. 'Whenever these regular gold shoppers find they have money to spare, they are putting it into bars.
'Currently, 30% of our UAE shoppers are opting for bars and coins, whereas just months ago, that tally was at 8%. We have never seen such a switch happen.'
Other jewellery retailers have more or less the same feedback to share. 'A sizable number of shoppers – those making regular investments in gold – do not want to spend on jewellery making charges right now,' said a jeweller, who operates outlets in the Dubai Gold Souq as well as at some of the prestigious malls in the city.
'So, they point to the gold bar – in the size they want – and that's it. The best part is they also save on making charges.'
Gold is the new currency
A lot of the retail level demand for the metal is centered around where prices might end up next. This weekend, bullion is at $3,315 an ounce, well below the $3,350 it touched midway through this week.
'For gold prices to unwind, world's central banks need to halt their buying spree – but that somehow seems unlikely to happen,' said Ahmed. 'So, naturally, the forecasts are for gold to push its way towards $3,700 sometime this year.
'That's why shoppers are putting their faith in bars and coins, where they see the possibility of further gains from present levels.'
Watch out for 'profit-taking'
At some point, global funds with sizable gold holdings could go in for some selling on their positions. That would trigger a drop in prices, to what levels is anyone's guess right now.
Any drop to around $2,900 levels would be a positive for shoppers.
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