Gold zooms to another record high as it goes past $2,200 an ounce
SHOPPERS FACED WITH REALITY OF NAVIGATING THROUGH A MARKET WHERE GOLD IS BECOMING INCREASINGLY EXPENSIVE
Gold shoppers in the UAE and around the world will have to wait longer for some relief in prices as they surged past $2,200 an ounce for the first time ever yesterday.
At one point, gold traded at $2,204 climbing more than $47, seemingly in reaction to US Federal Reserve’s decision to leave interest rates untouched.
The swift reaction in gold prices was expected given the circumstances. “Gold’s next movements were always going to be linked to the US Fed decision, but what all this points is that prices will remain elevated at $2,100 and over,” said Abdul Salam K.P., vice-chairman of Malabar Gold & Diamonds.
Keeping buyers interested
“With the current prices, UAE jewellers will likely extend the discounts offered on making charges to stay competitive on pricing. And probably, the UAE gold market could also start thinking of options other than raffle draws to boost spending.”
Upwards of $2,000 for the near future seems to be the consensus among UAE jewellery retailers. This means shoppers will be changing how they approach gold buying.
So, if $1,700-$1,800 an ounce was what shoppers typically would have made a rush for, that could soon change to when prices slip to $1,900$2,000.
Just look at this figure: based on current rate, gold prices are up by $856 on an ounce basis from what they were in 2019. That’s higher by 65 per cent.
Just in the last 30 days, this “safe haven” asset is firmer by $132 on an ounce basis. (One troy ounce is 31.03 grams.)
What should shoppers do?
Many major UAE jewellers are currently offering steep discounts on making charges as part of Ramadan promotions, with some waiving making charges entirely on select collections. Alternatively, shoppers could consider exchanging their current gold holdings for new purchases, with around 30-50 per cent of purchases
currently involving exchange, and in some cases, up to 70 per cent.
The rule of thumb is that shoppers are better off exchanging gold they bought before 2020 to get the best possible returns. After 2020, gold had been mostly averaging $1,900 levels.
“Gold has been going in one direction for the last 23 years — and it will continue,” said Thomas at Joyalukkas Jewellery. “Waiting for a ‘good’ price to buy gold is not a good idea, especially when promotions are on.”
Two key gold buying phases
Looking ahead, two significant phases for gold buying emerge: the period leading up to and during the Eid holidays, and the Indian festival of ‘Akshaya Trithiya’ in early May. These occasions historically see heightened gold buying activity, with potential softening of prices between early April and May 10 possibly supporting demand.
Will tourists keep buying?
Jewellers hope tourists will keep spending on gold whatever be the price. “Tourists view purchasing gold jewellery here as a staple part of their itinerary, benefiting from comparatively lower prices,” said Arjun Dhanak, director at Kanz Jewels. “In today’s digital era, customers can easily compare gold prices.
“While staying mindful of market fluctuations, our focus remains on delivering exceptional designs and competitive pricing to ensure shoppers feel confident in their purchases. And alleviate any of their concerns about overspending or whether to wait for potential price drops.”
The coming days will all be about trying to settle shopper concerns on prices...