UAE gold prices at lifetime high of Dh224.5 per gram

Retail gold price in the UAE shot to a lifetime high of Dh224.50 per gram for 24ct gold and Dh211.25 per gram for 22ct gold this morning, according to the Dubai Gold & Jewellery Group.

At around 11.30am UAE time, global gold prices were up $43/oz over yesterday, trading at $1,893/oz, after making a lifetime high of $1,894/oz hour ago. The yellow metal continued its ascent for a third consecutive all-time high on Monday, defying a rebound in the dollar that has seen the US dollar index, which tracks the strength of the greenback against a basket of currencies, rise 0.10 per cent.

Gold prices have rallied more than 30 per cent year-to-date in 2011, and expert opinion is now split about whether or not gold is a bubble ready to burst anytime. While some experts believe that since the recent socio-economic turmoil in the world is nowhere near its end, gold will continue to gain currency as a safe haven and therefore, expect its price to go up to $2,500/oz by the end of the year.

However, there are those that believe that, having gone up by an average 27 per cent per year for the last three years, gold prices are already in bubble territory and are ready to implode.

Concerns about the economic health of the US and the Euro Zone – the world’s most important and globally connected economies – have helped fuel the rise of gold to unprecedented levels over the past couple of years, with bullion prices briefly overshadowing prices of platinum, which is a much rarer metal as compared to gold and therefore has historically commanded a greater price than the yellow metal.

Meanwhile, oil prices slipped around 2 per cent in global markets as Libyan rebels captured a large part of Tripoli, fuelling speculation of resumption of Libyan supply on the markets in the near future. Brent prices fell $2.27 per barrel to around $106.35 on the ICE exchange.

Oil prices had shot up from $84 per barrel in February to $115 in May after Libya’s oil exports – 1.5 million barrels a day – were halted after an uprising began in the country against its long-time ruler Moammar Gadhafi’s regime.
 
Spot gold surged 1.4 per cent to score an all-time high for a third consecutive session on Monday, as nervous investors fled to the safety of the bullion amid fears of another US recession and the euro zone's debt crisis. 

Spot gold struck a record top above $1,878 an ounce, after staging its biggest weekly gain in 2-1/2 years last week.

US gold jumped 1.6 per cent to a record high of $1,881.9 earlier in the day.

However, prices climbed down slightly later in the day as Asian stocks turned positive when some investors returned to pick bargains after the market posted its worst performance in two weeks last Friday.

By 0309 GMT, spot gold was up 0.6 per cent at $1,869.49. US gold stood at $1,872.80, up 1.1 per cent from previous close. 

Persistent flow of weak macro data out of the US and a complete lack of confidence in marginal economies of Europe have driven gold to consecutive record highs, said Tom Price, Global Commodity Analyst of UBS.

"We are not expecting anything supporting the US economy or the macro data for at least a couple of months," said Price, Europe we regard even weaker. We are thinking $1,900-$2,000 over the very short period of time is a likely target." 

Investors are waiting for signs of further stimulus from the US Federal Reserve when bankers gather in Jackson Hole, Wyoming, late this week, one year after Chairman Ben Bernanke aunched a second round of quantitative easing to revive the economy.

Additional bond purchase by the Fed could raise inflation outlook and further boost gold, but many view the chances of a third round of quantitative easing limited and expect the Fed to take gradual measures to boost the economy.

Technical analysis suggested that gold could pierce through $1,900 over the day, said Reuters market analyst Wang Tao.

Holdings in the SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, rose to 1,290.762 tonnes by August 21, highest in a week and half.  

But speculators scaled back their bullish bets in US gold futures and options for a second week last week, as bullion's rapid rally prompted some investors to liquidate positions, data showed.

"Key resistance in gold will be found at $1,946, however, the market may need an extraordinary event to take it above that level," said MF Global in a research note.

Other precious metals tracked gold's strength. Spot silver rose as much as 2.5 per cent to a three-month high of $43.93, extending a 10-per cent rise last week - its best week since December.  Spot platinum hit a three-year high of $1,887, on course for its 10th consecutive session of rise.  

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