Gold prices are biased towards the upside due to ongoing US-China trade tensions, the Iran crisis and strong demand expected from festivals during the second half of 2019, industry analysts and executives say.
Trading at $1,341 an ounce, the yellow metal could shine all the way to $1,550 if it first breaks through the key barrier of $1,380.
Gold prices eased after hitting a 14-month high of $1,355 on June 14 as intensifying political concerns in parts of the Middle East and weak data from China and the US pushed the metal higher. The yellow metal has gained nearly 5 per cent year-to-date as it was closed at $1,278 on December 31, 2018.
He said concerns of a global slowdown due to an escalating trade war, crisis in parts of the Middle East, recent stock market volatility and declining bond yields paint a positive fundamental picture for gold in the latter part of the year.
Abdul Salam K.P., group executive director at Malabar Group, says gold works as an ideal hedge against uncontrolled market factors as they are facing some uncertainty these days due to global political and trade worries.
“Gold market growth has been positive so far this year compared to last year and we do expect the trend to keep going in the second half,” he said. T.S. Kalyanaraman, chairman and managing director of Kalyan Jewellers, sees gold prices will go up in the second half of the year.
Factors to watch
Kalyanaraman said there was a time when seasonal demand for gold was the only reason for price fluctuations, but today it has become increasingly difficult to predict gold prices. “Various global factors along with demand during the wedding season starting from September will play a role in pricing,” he said.
Trends in jewellery
Abdul Salam noted that currently, the trend among buyers is that they demand more lightweight and multi-use jewellery, which can be used on multiple occasions and is subtle and sophisticated. “Bulky statement-piece jewellery is in high demand for wedding purposes. Besides this, the major growth is in the demand for solitaires and diamond jewellery,” he said.
He said residents have become well-accustomed to the 5 per cent value-added tax factor now and the initial drop in sales post-VAT introduction has picked up its momentum and the sales graph is going uphill again. And the VAT refund scheme for tourists, implemented last year, has brought back visitors in large numbers to jewellery stores.
Source: Khaleej Time.