Dubai gold prices surge as investors seek safe haven

Dubai - The surge in gold price is on account of the fact that gold is still considered as the safest investment.

Gold seems to be on a roller-coaster ride as local prices in Dubai marginally surged to quote 24k gold at Dh201.25 per 10 grams against the previous close of Dh200, and 22k at Dh189 against Dh188 previously.

The surge in gold price is on account of the fact that gold is still considered as the safest investment. It is a well-known fact that the three key drivers of gold prices are demand, supply and the behaviour of investors.

Anil Dhanak, managing director, Kanz Jewels, said: "Investors are looking for a safe haven and at the moment gold is the best bet. When there is a dip in economic conditions, gold tends to go up and the current times is not an exception to that. Even though gold manufacturers have put a temporary hold on gold manufacturing, retailers are holding gold reserves and procuring more gold which has resulted in gold price increase."

Endorsing a similar view, Vinay  Jethwani, partner, Meena Jewellers, said: "Gold has gone up a little on account of safe heaven buying. But it is  still within the range. It would be interesting to see where does gold go as it is still on a crossroad and things are not very clear in today's uncertain times, though the trend is slightly bullish now."

Gold prices fell one per cent on Tuesday, retreating from a one-month high hit earlier in the session as risk sentiment improved on wider market optimism that the coronavirus pandemic may be easing.

Spot gold was down 0.3 per cent at $1,657.50 per ounce by 0852 GMT, after rising to a one-month high of $1,671.40. The metal had risen as much as 2.8 per cent on Monday.

"Risk appetite is back in the markets as new infections are declining, that's weighing on gold prices. Also higher yields are negative for gold," said Quantitative Commodity Research analyst Peter Fertig. "However, some investors fear that monetary policy would lead to inflation. For them, buying gold at these levels remains attractive."

US gold futures rose 0.5 per cent to $1,701.60, extending a lead over London spot prices, signalling market worries that refinery closures and logistics constraints could hamper bullion shipments to the United States to meet contract requirements.

"Gold investors are revelling in the level of central bank stimulus and fiscal spending, especially when it raises government debt levels," said Stephen Innes, chief market strategist at financial services firm AxiCorp, in a note.
 
Indicative of sentiment, the holdings of world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.5 per cent to 984.26 tonnes on Monday - its highest in over three years.
sandhya@khaleejtimes.com
With inputs from Reuters

• Gold and Forex