Gold buying in Dubai rises up to 30% after prices dip to six-month low
Gold is firmly in a downtrend, mainly due to the strength in the dollar
With the price of gold dipping to a six-month low, Dubai's jewellery outlets have started to see an upswing in sales of up to 30 per cent in June after a prolonged lull.
International gold price dropped to near $1,260 an ounce on Thursday but climbed back during Friday's session as the dollar slipped from its 2018 high near 95.20.
Jewellery outlets in the UAE witnessed a sudden pick-up in sales as non-residents preparing to return to their home countries for school holidays rushed to get the most out of the price advantage.
"Jewellery sales have shot up by 25-30 per cent in June compared to the average sales volume during the first five months since January," said Joy Alukkas, chairman of Joyalukkas Group. "Sales this month have gone up by 10 per cent compared to June 2017," he said.
"The dip in gold price is encouraging the customers to come back to jewellery stores and we expect them to make full use of this opportunity as school summer vacation is round the corner. We are witnessing a significant increase in the customer footfalls over the past few days with customers taking advantage of the lower price," said Shamlal Ahamed M.P., managing director - international operations, Malabar Gold & Diamonds.
Globally, gold prices, which normally benefit in times of uncertainty, failed to gain despite the ongoing trade war due to the strength of the dollar as the US Federal Reserve kept its outlook for higher interest rates.
On Monday, gold futures finished with a loss with the precious metal marking another low year to date, even as the dollar, strong throughout the month, weakened against its currency rivals.
"Gold is firmly in a downtrend, mainly due to the strength in the dollar. Higher rates and a stronger dollar are headwinds for commodities because they don't offer a yield and a strengthening buck tends to weigh on assets priced in the currency, making them more expensive for purchasers using other monetary units," said MAK Harid, managing director, Paradigm Financial Services.
"Gold's current slide comes as it has not been treated to a typical haven boost amid global trade hostilities, mostly because the higher interest-rate environment has fuelled the dollar's advance," said Harid.
"Traders often turn to gold in times of political uncertainty, as the precious metal is often considered a safe haven from the impact of geopolitics but gold has struggled amid the latest political risks due to the strength in the greenback. Technically, prices are nearing the long term support zone of $1260 - $1240 offering a good opportunity for a short term bounce at least," said an analyst at Century Financial Weekly Market Report.
"A fresh round of global trade friction is again driving market sentiment, although the issue has had a subdued impact in supporting gold deemed traditionally as safe haven metal during crises," said a Dubai-based precious metal analyst.
Spot gold fell 0.4 per cent to $1,262.88 an ounce, its lowest since December 20 at $1,261.36 earlier, having lost about three per cent over the last few sessions. Gold futures for August delivery were down 0.8 per cent at $1,264.50 per ounce last week.
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