“Hedging” against rising prices stimulates gold sales

Gold prices recorded new declines at the end of last week, with values ​​ranging between six and 10 dirhams per gram of various karats, compared to their prices at the end of the previous week, according to the price indicators announced in the Dubai and Sharjah markets, while the decline recorded by the yellow metal comes for the second week in a row, bringing the total decline of a gram to 24 dirhams in two weeks.

Officials of gold and jewelry trade outlets told Emirates Today that the markets witnessed an improvement in demand for gifts of gold jewelry, supported by the recent continued decline in gold, which in turn contributed to stimulating demand for bullion, pointing out that most purchases are made within the framework of “hedging” against the return of gold prices to rise in the coming periods.

Director of Dahkan Gold and Jewelry Trading Company, Jay Dahkan, said: “The continued price declines recorded by gold had an impact on the markets, as demand for gifts of gold jewelry improved, especially 18-karat gold.”

He added: “The price declines also contributed to stimulating demand at remarkable rates for gold bullion, of medium and small weights, with the expectation of recording more demand in the coming days.”

For his part, the sales official at the “Rej Gold and Jewelery Trading” store, Mang Balik, said: “Many dealers have benefited from the decline in gold prices during the recent period, by purchasing gold jewelry gifts,” pointing out that the largest share of sales was concentrated in small and medium weight jewelry.

Balik attributed the growth in demand at large rates for bullion during the recent period, to the expectation of many dealers that gold will return to record new price increases in the coming weeks.

In the same context, the sales manager at the “Dayum Gold and Jewelry Trading” store, Del Son, said: “Most of the purchases that are taking place in the markets currently come within the framework of (hedging) against the return of gold prices to rise in the coming periods, which prompts many dealers to buy bullion in small and medium weights.”

He stressed that the continued price declines had positive effects on the markets during the recent period through improved demand in varying proportions for gifts of gold jewelry.

Gold prices

The price of a gram of 24-carat gold at the end of the week reached 557.5 dirhams, a decrease of 10 dirhams, compared to its prices at the end of the previous week, while the price of a gram of 22-carat gold recorded 516.25 dirhams, a decrease of nine dirhams.

In turn, the price of a gram of 21-carat gold reached 495 dirhams, a decrease of nine dirhams, the price of a gram of 18-carat gold reached 424 dirhams, a decrease of eight dirhams, and the price of a gram of 14-carat gold reached 331 dirhams, a decrease of six dirhams.

• The markets are witnessing an improvement in demand for gifts of gold jewelry and bullion of small and medium weights.