DUBAI // Analysts are predicting that the price of gold will once again surge above US$1,000 an ounce as investors turn to the metal as a haven from market turmoil. Gold's status as an inflation hedge and an alternative to the US dollar has resulted in a surge of buying in the Middle East, China and Asia. "There is very much the possibility before the end of the year that we will see gold prices moving to four figures," said Philip Newman, the director of GFMS, a London-based precious metals consultancy. "People are concerned about the banking environment, particularly as you have many names disappearing and other names rolling in with other banks. In such cases, you have this view of gold as a safe haven." Gold futures for December rose yesterday after US congressional leaders rejected the government's proposed bank rescue plan. December delivery rose $5.90, or 0.7 per cent, to close at $894.40 an ounce on the New York Mercantile Exchange, driven by historic losses in the Dow Jones Industrial Average. On March 17, the metal reached a record $1,032.70 an ounce as soaring crude oil prices spurred investors to seek protection against inflation. Analysts say that physical gold buying will also soar. Coin dealers in the US and Canada have reported a surge in purchases of coins and other gold products. Last Thursday, the US Mint was forced to temporarily suspend sales of its American Buffalo 24-carat gold one-ounce bullion coins because strong demand depleted its inventory. Industry insiders say the Ramadan holiday and the summer tourism season, coupled with lower prices, have also led to a surge in gold jewellery sales. With gold prices expected to rise, many new investors are making jewellery purchases in an effort to capitalise on the temporary lull in prices. "People reacted significantly to the change in prices," said Swapna Nair, the general manager of the Dubai Gold and Jewellery Group. "Sales last month have been amazing for us because prices crashed and the shopping festival is going to end, so everybody ran and bought gold before the prices went back up." A falling US currency also makes metals, priced in dollars, cheaper for holders of other currencies. Copper, for example, rallied 26 per cent in the first quarter, more than any other metal on the Reuters/Jefferies CRB commodity price index, reaching a record $4.26 on May 5. Since then, the price has fallen 32 per cent as US growth faltered and prospects for a rebound were eroded by the failure of banks burdened by subprime mortgage loans. "Gold has not been a natural home for some of these investors, but its role is still an important one as a hedge against other assets, particularly as we see many of them significantly weakening," said Mr Newman. "The gold market is quite tiny compared to many other markets, so it doesn't take a great deal of money to push the price up." Daniel Smith, a metals analyst at Standard Chartered Bank, said that while a $1,000 gold price was inevitable, it would not reach those levels until next year. "The most likely scenario is that there will be a bailout of the US financial system," Mr Smith said. "While we will probably continue to get more bad news, it won't be as bad as what we've seen over the last couple of weeks, so gold should stabilise." firstname.lastname@example.org
- Al Habtoor head sees continuing challenges within UAE insurance
- Arqaam bulks up with Instrata Capital unit
- Analysis: Gold expected to hit US$1,400 in 2014
- Analysis: Abu Dhabi and Dubai stock markets bounce back in February
- Kuwaiti investment firm A’ayan and its counterparts go back to basics
- Goldman Sachs plans to restart equity sales in Mena region
- Most Viewed
- Most Commented
- In pictures: Top 10 most popular mobile handsets in the UAE
- Apple iPhone 5 beats Samsung S3 as UAE’s most popular smartphone
- Dh1bn Palm Jumeirah resort aims to bring Miami’s glamour and jet-set lifestyle to Dubai
- Iran re-entry to oil markets puts pressure on GCC
- Deyaar unveils Dh900m hospitality and housing project in Dubai’s Business Bay
- Most Viewed
- Most Commented
- Federal Traffic Council approves proposal to lower UAE driving age
- Men ripped off woman’s clothes in bathroom, Abu Dhabi court hears
- Ties no longer mandatory for Dubai cabbies amid safety concerns
- OSN blames rival for TV sport blackout in the UAE as fans will have to buy new set-top boxes
- Live blog: With the emergency workers at Rashid Hospital Trauma Centre
In pictures: Middle East’s driest winter
poses food threat
The dry season has already hurt prospects for the cereal harvest in areas of Syria and to a lesser extent Iraq. Several of the countries under pressure are already significant buyers of grain from international markets.
In pictures: Top 10 most popular mobile handsets in the UAE
Here are the top 10 mobile handets in the UAE by specific model for the fourth quarter of 2013, according to the Telecommunications Regulation Authority.
In pictures: Japan three years after the disaster
As Japan marks the third anniversary of the devastating earthquake, the country struggles to rebuild tsunami-hit communities and to clean up radiation from the Fukushima nuclear plant.
In pictures: CeBIT 2014 opens in Germany
CeBIT 2014 got underway in Hannover, Germany with mobile security and encrypted communications some of the topics expected to feature in the spotlight in Europe's largest technology trade show.
China in pictures: The desolation of smog
China will tighten environmental legislation and force polluters to pay compensation following renewed blasts of toxic air.
Rates report: Latest on UAE loans, accounts and credit cards
Souqamal.com brings you the latest interest rates on banking products in the UAE.