As gold prices reach record highs, many customers in the UAE are finding ways to adapt their purchasing habits, especially in the lead-up to Dhanteras and Diwali. Karan Singh, an Indian entrepreneur with restaurants in the UAE, exemplifies this trend. He has been investing Dh5,000 ($1,361) monthly in gold bars for the past four and a half years.
Despite recent spikes in gold prices, Singh remains unfazed, as he employs a dollar-cost averaging strategy. This method involves consistently investing the same amount of money over time, regardless of price fluctuations. “We buy jewelry for the family during Diwali, no matter what the gold price is. There are no excuses not to buy gold on this occasion,” he states. Singh believes that while he may be paying more now, his previous investments have mitigated any losses.
Gold prices reached a peak of $2,758.37 on October 23, driven by geopolitical tensions in the Middle East and uncertainty surrounding the U.S. Federal Reserve’s policies and the presidential election. The precious metal has risen by about a third this year, with its rally accelerating in recent months as the Fed signaled a potential shift toward lower interest rates.
The approaching U.S. election, featuring a tight race between Donald Trump and Kamala Harris, has also heightened demand for safe-haven assets like gold, according to Mohamed Hashad, chief market strategist at Noor Capital. “Geopolitical concerns, particularly the escalating conflict in the Middle East, have further boosted demand,” he explains. Recent events, including an attempted drone attack on Israeli Prime Minister Benjamin Netanyahu, have amplified fears and uncertainty.
Hedge funds and money managers have contributed to the gold rally by increasing their net-long positions and adding gold to exchange-traded fund holdings. Central banks have also ramped up their purchases of bullion, further driving prices upward.
For Singh, investing in gold bars serves as a means of diversifying his portfolio and hedging against the volatility of stock markets. “I don’t buy gold for religious reasons or attach emotional value to these purchases,” he clarifies. He anticipates that geopolitical tensions will likely push gold prices higher over the next 12 to 14 months.
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