Price of Gold

The price of gold at the moment is currently north of $1000 per ounce. These are unprecedented levels and those that reflect the current market sentiment. The price of gold has historically been correlated to oil and inflation. If you look at the current price of oil which hovers around the $115 per barrel mark, you could say that gold is undervalued, at the current time. And there are other factors in play. People invest in commodities in a time of slow down as they move away from equities. They also invest in gold to hedge against inflation and the US dollar which is happening right now. There is only one way to go for the US dollar - down. And in the UAE, with the dirham pegged to the dollar, inflation will remain around the 10% mark. If all things remain the same, the gold price will continue to move up. The UAE is not the main factor but is a factor in the gold market. Dubai's demand is based probably split equally between the local market (many of whom are expats), and the tourist market (many of whom come to Dubai and the UAE with the prime goal to buy gold and jewellery for wedding and the like). This demand, the physical demand, is about 75% of the UAE demand and will remain , at worst, at a stable level. 2007 was the highest year ever despite the price of gold, and 2008 is already up by more than 15% in demand for the first quarter year on year. The investment demand which will continue upwards, is about 25%. To those who say that gold prices will continue to $1250 and $1300, I think this is sound logic, given that all things remain the same. But what goes up must come down the $700-800 level will be where the gold price might end up in the medium term. All things are cyclical, aren't they? But over the next two years, the only way is up.

How to buy gold in Dubai