UAE: Gold hits a high of Dh353, but sales see only slight drop

Khaleej Times

19-02-2025

The persistent surge in gold rates to record highs has triggered divergent consumer strategies with most analysts observing a deep-rooted bullish sentiment among investors amid forecasts of prices reaching over $3,200.
According to bullion and jewellery trade circles in the UAE, while many retail investors are doubling down on gold, driven by FOMO (fear of missing out) and expectations of further gains, high-net-worth individuals (HNWIs) continue to boost their holdings.
'Soaring prices have not dampened the appetite of jewellery lovers. Often, as prices surge, we notice a short-term confusion among consumers until they get used to the higher price level. When prices rise sharply, we do normally experience a slight drop in sales volume albeit most outlets manage to maintain the value level," says Joy Alukkas, chairman of Alukkas Jewellery.
Chirag Vora, managing director of Bafleh Jewellery, says he has observed varied responses to rising gold prices. 'Cautious buyers tend to hold off, affecting impulse purchases. However, many still view gold as a long-term investment, prompting them to buy high-value pieces.'
Vora said his sales volume has seen a slight decline, particularly in spontaneous purchases, but unique, quality items continue to attract interest.
'To adapt, we are promoting more affordable options and emphasising our craftsmanship. Additionally, we're focusing on creating lightweight jewellery without compromising on design, ensuring our pieces remain desirable and accessible. While market conditions may have shifted consumer behaviour, we remain optimistic and dedicated to providing appealing choices for our clientele,' said Vora.
Gold has already seen record-high prices within just six weeks since the start of 2025. In the UAE, the yellow metal saw an upward trend on Wednesday, with 24-carat gold rising by Dh2.25 to Dh353. Similarly, 22-carat gold also gained Dh2, reaching Dh328.25 as spot gold decreased 0.2 per cent to $2,928.52 an ounce, just $14 short of its all-time high of $2,942.70 achieved last week.
'Persistent uncertainty and institutional buying patterns justify gold's upward trend. Consumers view it as a lifeline against currency devaluation,' notes Kevin Shahnazari, CEO of FinlyWealth.
Analysts point to deep-rooted bullish sentiment, underinvestment by investors, and strong official sector demand as key drivers for the anticipated rally in gold prices.
UBS updated its gold prices forecast, projecting that the yellow metal could reach a high of over $3,200 before stabilising at elevated levels in the coming years.
"It seems that so much has already happened and it is only February. While this sentiment probably applies across financial markets in 2025, gold in particular has seen unprecedented market dislocations and record-high prices in just over six weeks since the start of the year." UBS strategist Joni Teves said in a note.
Gold's rally began in late 2024, driven by heightened demand from central banks, geopolitical instability, and inflation fears. By February 2025, prices hovered near $2,943, with technical indicators like the Relative Strength Index (RSI) signaling overbought conditions. However, the metal's resilience has been tested by mixed signals: the US dollar's strength, Federal Reserve rate-cut uncertainties, and former President Donald Trump's renewed tariff threats on semiconductors and pharmaceuticals
"Our latest assessment of market conditions prompts us to update our gold views and revise our price forecasts higher. These changes bring forward the peak to the latter part of 2025, with gold reaching a higher level than what we had before," Teves said.
Bullion experts say gold's 2025 trajectory hinges on a fragile equilibrium of inflation, policy, and geopolitics. While bullish sentiment dominates, experts caution against overexposure. As Kristalina Georgieva, IMF Managing Director, states, 'Gold's role in preserving wealth is undeniable, but its volatility demands prudence.'
According to market experts, in a world where $300 trillion in global debt undermines fiat currencies, gold remains a timeless hedge. Yet, as prices flirt with $3,000, the adage 'buy low, sell high' has never been more relevant—or more contested.