UAE: Gold Prices Hit Record High, Jewellery Sales Temporarily Slow

Gold prices in the UAE shot up to new record high on Monday afternoon due to which there was a decline in the demand for gold jewellery. The 24K gold variant went up to Dh296. Dh292 per gram in the afternoon as compared to Dh293.0 per gram by evening. Other types of gold which included 22K, 21K and 18K were at Dh271. 25, Dh262. 5, and Dh225.0 per gram, respectively.

Shoppers’ Wait-and-Watch Approach

Dubai gold jewellery buyers have the tendency to be patient and wait until prices go too high before making any purchase as they believe that there will be a drop in prices soon. This was demonstrated as many residents had already purchased gold jewelry in the weeks running up to the Akshaya Tritiya on 10th of may which is considered a favorable day for buying gold jewelry.

Within the duration of the festival, gold jewellers in Dubai recorded increased turnover as many residents and visitors are taking advantage of discount and other sale offers. Some industry executives expect the sales of gold jewellery to drop for a while before recovering. Under the circumstances, they expect sales increase during the upcoming festivals and the upcoming wedding season, as gold is considered a safe haven among consumers as well among the local and foreign tourists.

Exogenous Factors Affecting Gold Price.

Spot gold traded globally at the price of $2,422. 45 per ounce at 7 PM UAE time against $2,450 per ounce earlier in the day. The price of gold rises due to the increased optimism for potential interest rate cuts by the US Federal Reserve. Mohamed Hashad, chief market strategist at Noor Capital, said that gold reached a record high during Asian session on Monday due to a rise in geopolitical tensions in the Middle East which raised demand for safe have assets.

Markets have remained under pressure due to conflicts in the Middle East and the helicopter crash that involved Iranian President Ebrahim Raisi. Moreover, rising military conflicts between Russia and Ukraine positively impacted the safe-haven demand.