By: Mahmoud Gamal
Dubai – Mubasher: Safe-haven gold has become the go-to investment for many Emirati families, which prefer to save money in safe-havens away from volatile markets.
Stock markets, which had been a means of investment for these families until recently, have been negatively impacted by the US-China trade war, according to associate at Allied Investment Partners Lenie Assaad.
Speaking to Mubasher in an exclusive interview, Assaad affirmed that investing in the precious metal in the GCC in general and in the UAE in particular at these volatile times as positive to an extent, indicating that when stock markets turn turbulent, gold purchases rise.
Below is Mubasher’s interview with Allied Investment Partners’ associate Lenie Assaad.
Mubasher: What is your assessment of gold prices in the UAE locally? Do you believe it has enough appeal to the market? If so what are the reasons?
Lenie Assaad: As a result of Diwali festivities and higher investors in the “currency” as a safe haven during global uncertainties, the UAE price market sees a steady increase in the value of gold the last few weeks.
But with the US Federal Reserve’s increasing interest rates thrice this year - potentially more so by December- and a stronger dollar currency suppressing gold rates, we may expect a downward shift in value again.
Mubasher: Are there any buying trends and increase in sales of the local gold market during the current year? And how do you think Dubai and the UAE will sell next year?
Lenie Assaad: Buying commodities as such is generally based on the price and global factors coupled with seasonality i.e. Diwali, Eid, etc.
Some analysts proclaim that with the given dip in gold prices following an increased interest rate and hence, a stronger dollar, investors can grasp the opportunity and tap into the gold market at lower rates.
Mubasher: What are the most important factors affecting the gold markets in the UAE during this year?
Lenie Assaad: Gold markets are predominantly influenced by higher Fed interest, as a strong dollar pushes down gold rates, with a further spike expected just around the corner in December this year. Additionally, an increased pressure on gold prices in 2019 is foreseen alongside a continuously booming US Dollar. This increases the opportunity cost of holding non-yielding bullions
Mubasher: Is there a correlation between global prices and local prices and how was the impact during the year in your opinion? What are the prospects for next year?
Lenie Assaad: In summary of the above, there is a definite correlation between global and local prices as international factors are automatically tailored into the regional markets, of which the UAE is a component.
Mubasher: What is your advice to invest in gold locally? Is there any specific tips in this field?
Lenie Assaad: Given the ongoing trade war between the US and China, dips in the technology sectors’ stocks, led international markets to experience uncertainties. In times like these, investing in gold is more or less a safe haven, as when stock markets are not stable, there is an increase in buying activity in the gold market.
Mubasher: Would you recommend investing in Gold for individuals and families at the moment rather than in stocks?
Lenie Assaad: Investment strategies are usually guided- or directed- by investor preferences. If one happens to be a risk averse investor, then gold would definitely be considered as a suitable investment when stock markets are faced with uncertainties.
However, with adopted strategies towards creating promising entry points, supported by attractive multiplies with respect to their peers, and strong fundamentals for stocks in real estate and banking sectors, the UAE is soon to be on top of the most business friendly economies. And together with the constantly new empowering government initiatives being introduced, the UAE markets will- without a doubt, be triggering a lot of investors’ eyes in the upcoming period.
