Gold prices on Monday jumped one percent to $1,758 an ounce, the highest since October 2012, while retail rates in Dubai for 22-carat gold also hit Dh200 per gram due weak global data from the US and Japan.
Analysts and industry executives expect that this upward trend in gold will continue in the coming months as investors and people invest more in the safe-haven commodity.
KP Abdul Salam, group executive director, Malabar Group, said this is the only asset that is giving returns to investors in these uncertain times.
"In fact, people have more confidence now in gold for that is the only asset which is appreciating. All other assets such as the stock market and property prices are on the losing side. People also buy gold because it can be easily liquidated. By 2020-end, it can touch $2,000 an ounce or Dh220 per gram for 22-karat in Dubai," said Abdul Salam.
"In addition to their daily needs, gold is the only item that people are buying. Also, NRIs are buying in good numbers because there is around 12 percent price difference between Dubai and India gold rates," he added.
The yellow metal, though, lost its gains later on Monday but it was still up over three percent in the past 30 days and 36.7 percent in the past one year.
The gold price was influenced by US retail sales and industrial production figures which both plunged in April. Data in Japan, meanwhile, confirmed that the world's third-largest economy slipped into recession in the first quarter. Markets are also keeping a wary eye on US-China trade relations.
Gold, which tends to appreciate on expectations of lower interest rates, has risen more than 16 percent this year as central banks have rolled out a wave of rate cuts and other stimulus measures to limit economic damage caused by the virus outbreak.
"The market continues to speculate about negative interest rates in the US and extremely low-interest rates and cheap money all over the world. Also, fears of the economic crisis are unfolding given the very weak data in the US and elsewhere," said Eugen Weinberg, analyst at Commerzbank.
"Dovish comments from the Fed and concerns about the stock market have lifted bullion. It is clear that investors are continuing to buy bullion as insurance in case there are any further corrections on stocks," Carlo Alberto De Casa, chief analyst at ActivTrades.
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