Even before the gold buying season kicks off, prices are already on the increase
Gold jewellery rates in the UAE are again on the rise after declining for quite some time, as people are buying into the precious metal amid uncertainties in equities.
The price of 24-karat gold stood at Dh148 per gram as of 9:20am on Monday, snapping a falling streak in the past several weeks and registering a Dh4 increase per gram in just about 14 days.
Last October 1, 24K was trading only at Dh144 per gram. The latest retail rates for 22K, 21K and 18K also went up by the same margin over the same period.
Spot gold increased by 0.4 per cent to $1,222 an ounce on early trade. Gold’s price increase may not bode well for jewellery fans in UAE, especially since the Diwali celebrations are just a few weeks away.
Demand for gold jewellery tends to increase during the Diwali season. Observed just ahead of the wedding season, the festival of lights is considered an auspicious time to buy gold.
Analysts said the precious metal has regained some of its shine and overcome its short-term resistance level of $1,212 an ounce, as investors have flocked to the bullion, and it looks like the bullish wave will continue over the short term.
“The combination of safe haven buying and lower-than-expected inflation have pushed gold prices to a nine-week high,” Vijay Valecha of Century Financial told Gulf News.
“In addition, US President Trump’s blistering criticism of the Federal Reserve may have contributed to the rally because few folks underestimate his power to influence Central Bank decisions.”
“Technically, gold prices have managed to overcome its short-term resistance level of $1,212 and the bullish momentum is likely to continue.”
Other experts said that gold currently looks attractive to investors due to the uncertainties in the stock market, and this trend tends to push the metal’s value higher.
Ole Hansen, head of commodity strategy at Saxo Bank, noted that the precious metal could even rise further to reclaim the $1,300 level.
“A continued focus on stock, bonds, and growth weakness and the potential of the dollar running out of steam could see the metal embark on a recovery towards $1,300 an ounce, our year-end target,” Hansen said.
“Gold is closely following the stock market. When stock markets are not stable, there is some safe haven buying,” Ronald Leung, chief dealer, Lee Cheong Gold Dealers in Hong Kong told Reuters.
“There are many uncertainties ahead for equities including the ongoing trade war, upcoming mid-term elections in the US, along with an expected interest rate hike in December.”