UAE EID AL Fitr: Gold shoppers will get a price shock after another record climb

Dubai: Shoppers in the UAE, Saudi Arabia and other Gulf states wanting to pick up jewellery as part of their Eid Al Fitr buys have received a big jolt – gold prices are in a record-setting race. New price peaks are being touched every few minutes, with bullion trading at $3,070 an ounce plus. So far today, gold is higher by an eye-watering $53.51.

Needless to say, the $3,070 plus levels are the highest gold has touched to date. It was in mid-March that it had broken through $3,050 an ounce.

UAE gold rate

The UAE gold rate gained Dh4 to be at Dh343 a gram for 22K, reflecting the steep increases in global bullion rates. Local rates had closed at Dh339.5 a gram for 22K, which itself was higher by Dh4.25 from just a week ago. And a significant Dh20 up on the UAE gold rate of March 1.

The Saudi gold rate for 22K is at SR347.

“The surge in gold prices will likely have a noticeable impact on Eid shopping,” said Anil Dhanak, Managing Director of Kanz Jewels.

“High gold prices often lead consumers to scale back their spending on jewelry and related items, as the cost becomes a significant concern. This could certainly result in subdued sales during the festive season, as shoppers may prioritize their budgets differently.”

The surge in gold prices will likely have a noticeable impact on Eid shopping

Anil Dhanak, Managing Director of Kanz Jewels — Anil Dhanak Managing Director of Kanz Jewels

“We had been expecting some sort of gold rush from UAE shoppers to make the imminent start of Eid Al Fitr holidays,” said a leading jewellery retailer in Dubai. “But a $50 spike today will be difficult to bear for a majority of shoppers. We hope they will still buy, even if the jewellery comes in at a fewer grams than they had planned on.”

Jewellery retailers are still hoping that Saudi tourists coming for the Eid break will still buy, to help the gain the VAT advantage. (Tourists to the UAE are re-compensated the 5% UAE VAT charges. In Saudi Arabia, the VAT is at 15%.)

All-out price shock for gold shoppers

“What’s happening today is an out and out price shock,” said a jeweller. “If shoppers were telling themselves that it’s OK to buy gold when it’s at $3,050 levels, they will need a lot of convincing to do so when prices are at $3,070.”

Gold purchases during Eid is one of the high-demand points in the UAE shopping calendar. Any drop in sales would then set up a difficult April for jewellers, more so with the Indian festival of ‘Akshaya Trithiya’ being on April 30. (The festival is marked by heavy gold purchase demand among Indian shoppers.)

What’s happening to gold?

A lot of things are happening at the same time when it comes to what’s driving gold prices. There’s the constant talk from President Trump on tariffs, and he’s jacked up those on car imports into the US to 25%. And on April 2, his administration is to announce a raft of more tariffs, all of which is jolting markets.

Amidst all this, the dollar’s also weakening, and that has spurred the heavy institutional investor interest in gold.

But what’s good for institutional investors is definitely not what gold shoppers want to be saddled with – i.e., record gold prices.

UAE gold shoppers have tried everything – exchange old for new (and made some seriously good pay-offs from that), booked early to lock-in prices, and waited for jewellers to offer discounts on making charges. Some have even waited for ‘no making charge’ offers.

Having done all that, consumers are hoping that gold prices will cool off from these $3,000 and over levels.

Can that happen? For that, there has to be less talk about tariffs for a start.

Author Credits: Manoj Nair, GULF News