Zawya - UAE gold prices hit record-high levels but sales remain upbeat

Jewellery sales in the UAE remain upbeat even as the gold price has hit record-high levels, a major retailer said.

The retail price of the yellow metal has gone up by more than 30 UAE dirhams ($8.16) per gram compared to a year ago, but jewellery shops are still seeing a huge influx of buyers, particularly tourists, according to Karim Merchant, managing director and CEO of Pure Gold Jewellers.

“At the moment, we are seeing strong buying trend from tourists visiting Dubai. The Dubai Shopping Festival (DSF) has brought in a steady flow of tourists and they are interested in purchasing gold jewellery from Dubai as it is known for its high quality and best prices,” Merchant told Zawya.

The bullion climbed to a nearly seven-year high of $1,590.90 per ounce on Monday before retreating to $1,562.81 an ounce on Tuesday.

As of 9:20 am, 24-karat (24K) gold was trading at 188.75 UAE dirhams per gram, still, a lot higher compared to 157 UAE dirhams in January 2019. The current price of 22K gold that was retailing at 147.25 UAE dirhams last year is 177.50 UAE dirhams.

Investors turned to haven assets like gold after the killing of an Iranian commander during an airstrike had sparked tensions between the United States and Iran.

While the financial markets are quick to react to geopolitical conditions, local jewellery fans take some time to adjust to higher gold prices, according to Merchant. However, he noted that local consumers tend to flock to the stores whenever there are sudden price dips.

“From what we have seen ever since the gold price rally in 2019 is that consumers take time to adjust to new prices,” he said. 

“Overall, I strongly believe that given the current environment, any slight drop in prices is an opportunity to buy gold as the yellow metal has proven time and again that it is a safe haven.”

Vijay Valecha, the chief market analyst at Century Financial, said it is likely that gold will still go up even after the US-Iran tensions, citing that there is already strong demand for the yellow metal due to the dovish monetary policy of major central banks.  The upcoming Chinese New Year is also going to work in favour of gold.

“The price of 24K gold has crossed 190 UAE dirhams per gram and should touch the 198 UAE dirhams mark in the coming one month. Strong support is available near the 185 UAE dirhams level,” Valecha told Zawya.

Source - Zawya