Investments can be volatile, and it’s a gamble. If it’s your lucky day, then you might end up in a profit. If not, then it’s a loss to bear. Investments can be in anything like stocks, real estate, or any precious metal. Among all the precious metals, gold is the most expensive and considered the safest investment. Like any other market, the gold market faces speculations and volatility, as well.
Gold has long been a part of history. Gold was used as a form of currency and had a monetary value. In the era of the kings that ruled over countries, the money is known to the people then was gold. Before World War 1, many European countries used the gold standard until it was suspended. After World War 2, one of the significant events in the history of currencies took place, which was the “Bretton Woods Agreement,” in which the international currency exchange regime was created, which lasted from the mid 4s to the early 70s. The agreement required the currencies to be pegged against the US dollar, but instead, the coins were pegged against the gold.
Some investors in a security market decline presume that gold is a safe investment, which will give them some breathing room, which is not always true. Gold, although, has an inverse relation with currencies and stocks. When we face the global market, downfall, currencies, and commodities move downward, which makes them less desirable to investors. Gold prices, on the other hand, can rise, or they may decline — it all about the correlation between gold and the stock market.
Gold With Economy
A gold price, like any other commodity, is affected by the law of supply and demand. But there are other factors like the central bank or the international monetary fund, which have a significant effect on the gold prices. Central banks and IMF hold gold reserves, which affect the price of gold. Another factor which is considered to affect the gold prices is the interest rates. Interest rates, when high, lower the cost of the gold because gold does not tend to earn interest.
Gold Carat or Karat (K) is a symbol that explains the purity of the gold.
- 18K= alloy with six parts of other metals and 18 parts of pure gold.
- 21K = alloy with three pieces of different minerals and 21 elements of pure gold.
- 22K= alloy with two slices of other metal and 22 parts of pure gold.
- 24K= most genuine gold.
Gold in Dubai UAE
The United Arab Emirates, known for its variety of gold and its purity, has the most attractive demand for gold. Gold prices are determined internationally. As of July 2019, the World Gold Council (WGC) said that due to the tonnes purchased by the central bank will make the US Federal Reserve cut interest rates. With the decrease in the interest rates and low return, the gold market would look more attractive to the investors. The government of Dubai has outdoor signs which display the live retail gold prices due to the daily fluctuation in the gold prices.
The demand for gold in the UAE is still high as people occasionally keep buying it regardless of the surge in the prices. It might be because the buyers have adjusted to the price increase. If we are to look at the historical data of the past few months, the gold prices in UAE have been showing an increasing trend and are expected to grow.
People in the UAE, apart from buying ahead on occasions like Diwali, Christmas, New Year, etc. are buying gold and not just gold jewelry but gold coins and bars because they believe that gold is the safest investment as of now due to the decline in the Interest rates.
Government Demand for Gold in UAE
The government of UAE believes that the demand for gold in their country would increase due to the increase in tourism. They are promoting their country to countries like India, China, Pakistan, etc. which have the demand for pure quality gold with excellent craftsmanship because the gold of UAE, as mentioned earlier, is known around the world for its quality and unique designs.
Apart from tourism, the increase in gold demand is expected during the festival seasons as well. Gold retailers expect their sales volume to increase, and some have experienced a 5% increase in their sales in festivals like Eid. Since the UAE has a lot of people from Asian Countries, and mostly in Asian countries, it is considered fortunate to buy gold in festivals, so the retailers have a lot of hope.
Gold is a significant investment, and it’s advised to buy gold when the gold prices are not so high because it’s scarce that gold prices fall even if they fall they don’t fall too much.