Gold prices break $2,300/oz for first time -should UAE shoppers still buy now or await correction?

Vijay Valecha, Gulf News, April 4, 2024

Dubai: The majority of UAE gold shoppers will now have only one choice open to them - wait for gold prices to fall.
Sharply.
 

Because right now, gold has just set another record - clearing the $2,300 an ounce mark for the very first time in the last hour or so in the international metals markets. In just 30 days, gold has gained $150 on an ounce basis, as bullion investors pile in and shoppers get muscled out by the steep prices and the rate at which they are climbing. Now, the expectation among shoppers and jewellery retailers at least is for the prices to start dropping as investors book profits. Which is what has always happened in the past when gold has been at or near highs.

"Clearly, shoppers must take some hard decisions on what price level they should get it," said Anil Dhanak, Managing Director of Kanz Jewels. "Best rule with an asset such as gold is they do when they have money to spare. Because the way gold has performed in past few weeks, there is no knowing what will happen next."

The UAE gold rate closed yesterday (April 3) at Dh255.75 a gram for 22K.

When will a correction come?

Gold prices typically drop when commodity investors and funds believe prices have now reached a point where they can do some heavy profit taking. Right about now, at $2,300 levels, should be an ideal time for some of that profit booking. But will it happen? The short answer - no one knows for sure.

"But when will that correction happen - there is so much of uncertainty in global markets that many feel gold
could even climb its way to $2,500 an ounce this year," said Shamlal Ahamed, Managing Director of International
Operations at Malabar Gold & Diamonds.
Now, talk about gold at $2,500 - or even $2,400 - levels will be the last thing shoppers will want to hear or see. In UAE gold rate terms, that would mean a gram of 22K would be in the Dh350-Dh400 a gram territory.

Eid gold shopping

According to jewellery industry sources, only a small percentage of the typical Eid related gold shopping has happened until now. Most shoppers have been waiting for some price cooling - and they are the ones who will be bitterly disappointed with the latest spike. All leading jewellers have slashed making charges to ease shopper concerns about buying now. "Gold remains one business where there won't be discounts on the core product - for shopper and seller alike, the gold price is the same," said Dhanak.

Next week, which will see the Eid break, UAE gold retailers are hoping that tourists and GCC visitors will do some buying. "Indian and Subcontinent tourists to UAE will not be dissuaded by the record prices - they will only see the 10-15 per cent lower price compared to buying in their domestic markets," said Ahamed. "

GOLD'S GOT MORE PRICE LEVELS TO GO?

Gold's current run is bringing more investors based in the UAE into the fold. They are using trading platforms to
pick up positions, many seeing gold as having more price levels to breach before 2024 ends.

"Gold's cleared $2,300 and it continues to look bullish," said Vijay Valecha of Century Financial. "There are hardly
any signs of a correction or a slowdown. It does look like this gold rally still has legs to scale newer heights.

"We are now seeing even silver turning extremely bullish, and the entire metals space could become the best opportunity even going forward for the rest of the year."

Source

Gulf News