UAE: Gold prices rise, is it the best time to buy?

The yellow metal has seen a steep upward rise, hitting a six-month peak

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Published: Tue 5 Dec 2023, 8:13 AM

Last updated: Tue 5 Dec 2023, 9:30 PM

As gold rates continue to climb higher, gold shops around the UAE have seen a huge surge in sales. Retailers have said that multiple reasons — including the rising prices, an influx of tourists and attractive offerings — have prompted a buying spree. However, is it the best time to invest in the yellow metal? Team KT posed the question to experts.

According to Shamlal Ahamed, managing director – international operations at Malabar Gold & Diamonds, the answer depends on people’s circumstances. “This is wedding season, so many people will have a limit to how long they can hold off without buying,” he said, speaking to Khaleej Times.

However, in his opinion, there is a chance of a small correction in gold prices shortly. “There is a possibility of a correction, especially before December 31,” he said. “We are expecting a dip of $50 to $100. I would advise customers to take immediate advantage of such price drops, if there are any.”

[Editor's Note: For real-time gold rates, click widget below or visit KT's dedicated Trading News page here.]

This sentiment was echoed by other industry insiders. “Gold prices could face some risks over the short term and could see some price corrections if the dollar and US yields continue to rise,’ said Paul Turner, Executive Director at Capex.com Middle East.

Gold has seen a steep upward rise, hitting a six-month peak on the back of expectations that an end to the US Federal Reserve's interest rate hike cycle would keep the dollar and yields under check. On Friday, gold hit $2,075 an ounce, and remained on track to soar towards an all-time high, around the $2,079-2,080 zone set in May.

Price protection

According to Shamlal, those wishing to invest in gold should start utilising offers that are available to them. “Most jewellery stores offer customers a feature called price protection,” he said. “This allows people to pay money and reserve gold for the gold rate of the day they are paying on. If the price drops, then they can buy the gold jewellery for the lower price. This is a great feature for buyers to make sure that they get the best rate.”

Historically, gold has been one of the most popular investment options because of its ability to hold value through inflation, economic crises and fluctuation in currencies.

However, Paul sounded a warning to future investors. “Economic data and market expectations could play a significant role in the future performance of gold and should be monitored closely,” he said. “US job market and PMI data releases this week as well as the publication of inflation data next week could affect market expectations and the Federal Reserve’s decision next week. The latter could significantly impact the course of gold prices.”

Upward trend

Experts point out that the value of gold has been reflecting an upward trend for a while and could continue to do so. “Gold prices have been increasing for the past two months as expectations have been shifting toward a softer monetary policy in the US and other countries,” said Paul. “Economic conditions have also been deteriorating to a certain extent while geopolitical tensions continue to represent a risk for various markets. As a result, gold prices could still find some room to climb.”

Shamlal also agreed that a long term increase in prices was on the horizon due to multiple reasons. “As long as the geopolitical tensions continue, there are chances the prices will go up higher,” he said. “The decrease in crude oil prices is another reason for gold prices to increase. Several international investors and moving their institutional investments over to gold. Overall, it is looking quite bullish for gold right now.”

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