Why is the net worth of gold touching all-time sky-high currently?

On the back of global slowdown or recession, Gold has risen back touching all-time sky high in the current situation.

The ever-climbing graph of one of the world’s precious metal Gold, surging above the $1500 mark to a record six-year high this month as the global investors being concerned regarding the state of the worldwide economy. It’s also considered as a haven for assets as due to the current situation prevailing in the market.

The overall spot Gold rates rose as higher as $1,526.95 per troy ounce the previous week, reaching a level not being breached ever since April 2013. This Tuesday, gold has risen 0.82 percent touching $1508 per ounce, with the net price rates in Dubai at Dh181 per gram of 24 karat gold. 

With the fear or threat of an impending global slowdown or recessed economy hitting most of the economies worldwide, it’s quite evident that net rate or gold’s net worth is going to mount ahead in the upcoming days and which is of significant concern.

Why is the net worth of the Gold so high currently?

Numerous factors are influencing the escalating gold prices to touch sky high. Few of them are as listed: –

· The mounting trade war between US and China.

· Increased tensions are mounting in Arabian Gulf’s Strait of Hormuz.

· Britain’s exit from the European Union.

· As well as several other threats to global trade.

· The surge in gold rates is also due to the record-breaking purchases by central Banks to maintain balance in the economic system.

The slow economies in many countries are also proving the central banks in cutting the interest rates in dwindling significant currencies as well as in creating absolute demand for the yellow metal.

Tushar Patani, Managing Director of Ajanta Jewellers in Abu Dhabi, also stated that “Gold is considered as safe heaven as an asset due to uncertainty in Market. As well the craze and the growing public interest in investing in the gold, is ultimately paving the way for a higher price.”

During the first half of this year, in itself as per the report of the World Gold Council this month, in particular, central banks have procured in 374.1 tonnes of gold – a 57 percent year-on-year increase and the highest amount ever since the exchequers became net buyers of gold during the 2010-2011 period.

Despite a bullish general stock market being witnessed showing signs of recession, the yellow metal has rallied up fuelling substantial gains amongst the Gold mining stocks. The GDX ETF (exchange-traded fund), tracking major gold mining companies has surged up to an all-time high of 37 percent year-to-date and as well 13.5 percent in this quarter alone.

How is the yellow metal priced?

The price of yellow metal in the international market is determined with the usual force of demand vs. supply. Higher demand is the main factor leading to higher rates and vice versa. Currently, the demand is skyrocketing, thus, leading to the surge in prices. The Gold has surged up to its net value by 18 percent since the beginning of the year.

Why is Dubai a major Gold Marketplace?

Dubai’s a significant market for gold as a result of the presence of lower-tax environment and as well as the existence of a large number of gold shops which usually sell the precious metal at a lower profit margin. Mr. Patni reveals that there are about more than 800 shops present in Dubai itself mainly based out in Deira’s Gold Souq and other places.

The other major factor of Dubai being major Gold Marketplace is that the Value added tax is not levied on Gold bars, although it is levied on the purchased jewelry. As well as, the levied VAT is entirely refundable for any purchases made by tourists.

Mode of Investing in Gold The investors can procure or purchase physical gold directly from Merchants, merchant establishments or shops, traders, or even numerous gold ATMs.

In Dubai, there are absolutely no restrictions in buying gold and is unique as there is a specific restriction on the quantity of gold purchased in other countries. People can also invest by proxy either by buying shares in companies that mine for gold, or in gold-based ETFs.