By Sachin Kumar
DOHA: The Brexit referendum and the ensuing market upheavals in the euro zone have pushed gold prices in Qatar to two-year highs, denting customers’ ability to buy the yellow metal during Eid Al Fitr.
Gold prices have jumped around QR10 or 7 percent in the past two weeks after the Brexit decision rattled the global financial system.
The yellow metal was trading at QR145 per gramme for 22 carat while 24 carat was trading at QR154 per gramme on June 23. A day later, when the result of the referendum was announced the price of 22 carat jumped to QR152.50 while the price of 24 carat rose to 161.50.
Since the start of this year, prices of the precious metal have jumped by 25-27 percent.
“Higher prices haven’t adversely affected gold sale due to Ramadan and Eid-related demand. However, high prices in the past few days have forced people to cut down their jewellery buying plans,” said a senior salesperson at a jewellery showroom at D Ring Road in Doha. “Demand for gold in Qatar rises significantly a week before Eid. Compared to other weeks, we usually see demand rising by 30-50 percent this week,” he added.
Due to steep rise in prices, gold buying will be a costly affair this Eid Al Fitr compared to the past two years.
Gold of 22-carat traded in the range of QR137 to QR122 in the previous year while 22 carat gold was trading at QR150.50 per gramme during Eid Al Fitr in 2014.
A referendum in the UK was held on June 23 to decide whether the country should leave or remain in the European Union. Around 52 percent of the voters voted to leave the 28-member European Union.
The unexpected outcome created uncertainty in the euro zone and as a result investors exited equities and invested in precious metals, which is considered a safe haven in uncertain times. This pushed up gold prices in the international market.
Demand for jewellery rise by 30% this Eid
Prices of the yellow metal in Qatar move in tandem with global prices because the prices here are linked to the international market, mainly the London bullion market.
“This Ramadan, the buying was mainly by families and customers bought bangles, chains, necklaces and other such jewellery.
“The demand for 22 carat gold jewellery was higher. Overall, the demand was up by 30 percent this Eid compared to the previous year,” said a senior executive of a jewellery showroom in the gold market near Bank Street.
“We saw many Asian expatriates buying gold jewellery yesterday. Buyers usually assume that prices remain low during Eid-Al-Fitr and it is the best time to buy gold,” he added.
The prices are expected to remain firm in the coming months because of uncertainties in the global markets as the UK voted to exit from the European Union.
The US Federal Reserve is unlikely to increase its interest rates in the near future due to the ongoing uncertainty.
This will help prices rise as the yellow metal is strongly dependent on the US Federal Reserve interest rate hike decision.
An increase in US interest rates strengthens the dollar, which prompts more fund outflows from gold and other commodities to the American currency.
The Peninsula
