UAE gold shoppers' Eid plans dented after pricespike

Gold hits another all-time high Friday - will it push on towards $2,300/oz?

Vijay Valecha, Gulf News, March 29, 2024

Dubai: Gold prices have cleared another new all-time high, of $2,232 an ounce, further hurting shoppers’ intent to pick up some jewellery ahead of the crucial Eid shopping period. Gold is trading at $2,233.75 in the metals market currently (at 7am) after a more than $41 per cent rise in recent hours.

A similar push had pushed gold past $2,200 for the first time on March 21. It went on to reach $2,223 that day, but had dropped to under $2,200 levels in recent days.

The current UAE gold rate for 22K is Dh247.25 a gram.

“Gold prices need to see a major correction if the UAE jewellery market is to see an Eid related demand increase,” said a gold retailer. “It’s difficult for shoppers to convince themselves to buy when the asset is at or near all-time high."

"The UAE market might still see some demand during the final week of Ramadan and for Eid, but the majority of the purchases could be for lower gram jewellery or just coins. The hope is that Gulf shoppers visiting the UAE wouls still make some decent sized purchases."

Can a correction happen?

Gold’s pricing strength since the start of the year has been pretty consistent, and even the dips have been relatively small and of short duration. Analysts reckon that the current cycle could still push it towards $2,250-$2,300 levels.

At which point, there could be a better chance for lower prices if investors decide to do some profit-taking. That should be the moment shoppers should watch out for.

“Already, there has been a lot of profit taking coming in by institutional investors and funds holding gold,” said Vijay Valecha, Chief Investment Officer at Century Financial. “That's the reason gold prices have been moving up much slower than it ideally should."

But when the UAE gold rate is inching towards $250 a gram, that will be small comfort for shoppers.