Gold continued to command higher retail prices in Dubai on Tuesday, but jewelers are confident that the rally will not dampen consumer demand.
Fans of the precious metal normally flock the jewelry shops when global prices tumble, in order to score some bargains. The price of gold climbed to its highest level since January 2015 during the weekend, hitting nearly $1,300 an ounce.
Karim Merchant, CEO and managing director of Pure Gold Jewelers, said there’s a likelihood that gold will continue to post further gains, given that the greenback is still weak and interest rates in the United States remain unchanged.
The price for 24-carat gold stood at Dh156.50 per gram as of 3pm on Tuesday in Dubai, up 5 per cent from last week. Other gold pieces were also trading higher, with 22K retailing at Dh147 per gram, 21K at Dh140.25 and 18K at Dh120.25.
“This week, we expect further increases in gold prices considering a weaker dollar and US decision not to change interest rates. The gold is now benefitting from its reputation as a safe haven,” said Merchant.
However, he pointed out that domestic demand for gold jewelry will hold up well and consumers will continue to open their wallets despite higher prices.
Customers buy gold jewelry even when the prices firm up, thinking they need to buy it before it goes up even further,” said Merchant.
“In our experience, there has been no adverse impact on retail sales due to the current price increase.”
The UAE has a huge market for gold jewelry, given that a significant proportion of the Asian expatriate population consider the precious yellow metal as a good store of value.
Last year, however, the overall demand for gold jewelry declined by three per cent as economic and socio-political factors led to marked declines across a number of markets during the course of the year, according to the World Gold Council. Demand in the Middle East region dropped by 5 per cent in the fourth quarter of 2015.
“Further falls in the price of oil and continued conflict across the region have fed through to declines in gold jewelry consumption. Declining tourist revenues were an added factor in the UAE,” the World Gold Council said.
Source: Gulf News