$2,000 well within sight for gold

Top Stories

$2,000 well within sight for gold

DUBAI — Gold continued to glitter as it hit an all-time high above $1,915 on Tuesday, as persistent worries about global economic growth burnished bullion’s safe-haven appeal.

By Muzaffar Rizvi

  • Follow us on
  • google-news
  • whatsapp
  • telegram

Published: Wed 24 Aug 2011, 10:25 PM

Last updated: Tue 7 Apr 2015, 3:47 AM

Spot gold gained 0.8 per cent in early trade to strike an unprecedented $1,915.50 an ounce, before easing to $1,875.69 in afternoon trading. The contract touched an intraday record of $1,917.90 in overnight electronic trading on the New York Mercantile Exchange. The metal is still up by nearly a third this year, and is on track for its biggest one-month rise since September 1999.

In Dubai, retail gold prices for 24-carat gold hit Dh227.50 per gramme in the morning and eased to Dh225 per gramme in the evening at 1930pm (local time), according to the Dubai Gold and Jewellery Group.

Similarly, prices of 22-carat touched Dh214 per gramme in the morning session and returned to Dh211.75 a gramme in the evening, the group said adding that the 10-tola bar price rose to record high of Dh26,275 in early trade.

“Gold prices will continue to rise in the foreseeable future and may hit $2,200 an ounce by the end of this year due to weakness in the US economy, eurozone debt crisis and volatility in the currency markets,” Firoz G. Merchant, chairman and founder of Pure Gold Jewellers, told Khaleej Times.

He said gold may hit psychological barrier of $2,000 by the end of this month or first week of September as the central banks began buying from the international market. He said Russia and Venezuela recently bought gold to boost their reserves and now China plans to diversify its currency reserves by investing more money in the yellow metal.

“Gold prices may hit 2,500 an ounce by mid next year as investors’ appetite for the yellow metal is on the rise,” Merchant said.

Dubai Gold and Jewellery Group general manager Biju Joy said global economic uncertainty fuelled by Europe’s crisis and uncertainty over US debts have encouraged people to turn to gold as the safest investment at this point.

Jewellery sale

In reply to a question, Merchant said higher gold prices are bound to dent jewellery sales in the short term, but people will keep buying. “It is difficult for the customers to digest the present gold prices, but they have no other choice at the moment.” Aside from higher prices, he said jewellery sales also slow down due to the Ramadan and summer vacations.

Merchant said higher gold prices are affecting jewellery demand in the region and encouraging people to invest in diamond jewellery.

“High price will impact jewellery sales but with the wedding season coming up, people will still buy gold jewellery. After all gold has proved itself to be the best investment,” Joy said.

Gold is in the 11th year of a bull market, the longest winning streak since 1920 in London, as investors seek to diversify their holdings away from equities and currencies. Bullion reached all-time highs in euros, British pounds and Swiss francs on Tuesday. Analysts said a sell-off in gold is unlikely in the current economic environment, as investors will be hard put to find an alternative asset that can protect their wealth as well as gold.

· muzaffarrizvi@khaleejtimes.com

More news from