Dubai gold prices hit record high

08/02/2017 07:32 AST

Gold jewellery prices in Dubai continued to climb on Tuesday as the bullion strengthened further on huge safe-haven demand largely triggered by a series of political events in the United States.

As of 12 noon, 24-karat gold was retailing at Dh149.25 per gram, the highest so far this year, up nearly Dh10 per gram from January 1 and Dh1.05 from Monday's early trade. In Asian trade, the metal climbed to its highest level since more than two months ago amid the political tension in the United States. Spot gold was trading at $1,226.45 an ounce by 1244 GMT, having earlier reached $1,227.13 – the same level recorded on November 17, according to Reuters.

Retail prices in Dubai have been gaining some ground since the beginning of the year, jumping by 6.9 per cent. Gold’s steady rise has been aided by a small US dollar correction and US President Donald Trump’s actions.

Analysts predicted that the price rise will continue over the next few weeks, with gold expected to hit $1,250 an ounce.

“Gold is on a positive trajectory since the beginning of this year. With the US dollar weakening, it has asserted its safe haven status. Gold price will continue to increase if the US dollar remains weak and US Fed Reserve decides not to change interest rates,” Karim Merchant, group CEO and managing director of Pure Gold Jewellers, told Gulf News. The expectation that the US dollar would strengthen further in 2017 has been challenged after the new US administration went on the attack and accused China, Europe and Japan of pursuing weak currency policies. “As a result of this verbal intervention, we have seen the dollar weaken by around 2 per cent against a basket of major currencies since the beginning of the year,” noted Ole Hansen, chief commodity strategy at Saxo Bank.

“Precious metals have rallied in response to the weaker dollar and some safe-haven allocation in response to Trump uncertainty,” Hansen added.

In Dubai, the recent volatility has also prompted investors to turn to other assets. The Dubai Gold and Commodities Exchanged reported that it traded an aggregate 1.37 million contracts in January, valued at $33 billion.

“Global markets are likely to continue experiencing sharp bouts of volatility throughout 2017 against a backdrop of major political developments and anticipated instability,” said Gaurang Desai, CEO of DGCX.

"We expect increased demand for derivative products for hedging and investment purposes.”

Gulfnews