The current gold price rally, driven by a massive sale of gold by the International Monetary Fund to India, is likely to continue, according to precious metal analysts in Dubai. They said  it may hit $1,200 an ounce in the near future.

Jewellery outlets in Dubai, Abu Dhabi and Sharjah also had lacklustre trading on Tuesday as “customers preferred to wait and watch”.

Since gold started its relentless rally late last year, Dubai’s gold jewellery outlets have been reporting sales declines of between 40 per cent and 75 per cent, said a trader who asked not to be identified.

“Most affected are the high-end jewellery outlets frequented by the rich who simply stopped buying. In contrast to a sales plunge of up to  75 per cent in those shops, outlets that cater for the middle- and lower-middle class segments have shown a drop of between 35 per cent and 45 per cent only,” he said.

He was confident that when buyers adjusted to the higher price, jewellery sales would pick up again. “Sudden price hikes always jolt the jewellery market,” said Tomy Joseph, general manager, marketing, of jewellery chain Joyalukkas.

“However, some level of investment demand is still there. Some people continue to buy gold jewellery as they anticipate further price surge.”

A weaker dollar could push gold prices higher, said Anto Joseph, financial manager of Inter Jewels, a Dubai-based gold wholesale and retail trader.

issacjohn@kahleejtimes.com