Gold on its way to break all-time historical highs, retailers say

Experts noted that shoppers are adopting a wait-and-watch mindset, which is typically the case when gold prices suddenly shoot up

  
Gold bars are seen at the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna, Austria, March 18, 2016. Image used for illustrative purposes.

Gold bars are seen at the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna, Austria, March 18, 2016. Image used for illustrative purposes.

REUTERS/Leonhard Foeger

Gold prices in the UAE, which have been recorded at their highest since 2011, are well on their way to breaking an all-time historical high, retailers in the UAE said.

Prices for 24K gold reached Dh219.5 per gram on Thursday, with 22K gold priced at Dh206.25. Shoppers looking to purchase a gram of 24K gold will have to pay Dh10.98 as value added tax (VAT), while those looking to purchase 22K gold will have to pay Dh10.31 per gram as VAT. This is just over the record Dh215 per gram price recorded for 22K gold on September 6, 2011.

Sanjay Jethwani, partner and managing director at Meena Jewellers, told Khaleej Times that Dubai still retains its title as the city of gold, where visitors and residents continue to shop, despite the precious metal touching an all-time high since 2011.

"Gold is seen as a safe haven and with the US dollar being devalued, the interest in buying gold is increasing," he said. "Also, with the effects of Covid-19, we anticipate that the price for gold will continue to increase until a cure is found in the form of a vaccine. As long as the virus continues to impact markets, we see the price of gold continuing its upward trend - it might even cross the $2,000 mark. I anticipate a price correction of around $100-$150 once a vaccine is introduced."

Jethwani also revealed that sales of the precious metal will increase now that Dubai is open for tourists once again. "People come to Dubai to buy gold, because it is a very attractive market for them. Also, visitors get a VAT refund on their purchases, so there are many tourists who will be taking this as an opportunity to shop for gold jewellery."

In addition, he pointed to the fact that many shoppers will be buying jewellery for the summer wedding season, which will see retailers post an increase in sales.

"Dubai proudly boasts a reputation of being a city which offers the lowest making charges, coupled with the highest standards of purity and the very best designs from all over the world, so jewellery sales are certain for sure," he added.

Karim Merchant, CEO and managing director of Pure Gold Jewellers, noted that customers will be adopting a wait-and-watch mindset, which is typically the case when gold prices suddenly shoot up.

"However in the medium term, once customers are adjusted to the new price level, we expect gold buying to pick up - as has always been the case," he said.

"Gold, once again, has proven is ability to protect family wealth," he added. "I personally feel that everyone should have a certain per cent of gold in their investment portfolio especially given today's economic environment and the expected stimulus of governments."

 

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