Dubai: Consumers in the UAE who haven’t been buying gold for a while are in for a shock: prices have reached a new high, climbing nearly Dh8 per gram in just a little over one week.

Just as the long Eid holidays in the UAE were wrapping up on Friday, the precious metal soared to $1,348.08 an ounce.

That’s the highest level for the bullion since nearly a year ago and it has triggered price increases at the stores across the UAE. As of 9:32am, Sunday, 24-karat (24k) gold was trading at Dh162.25 per gram, up by Dh7.50 from May 30.

The price of 22K gold also went up to Dh152.50, while 21K and 18K rose to Dh145.50 and Dh124.75 per gram, respectively, according to the latest rates released by Dubai Gold and Jewellery Group.

With the latest price increases, today’s gold buyer would end up spending Dh225 more on a 30-gram necklace than they would have late last month.

While huge buying activity during Eid Al Fitr may have contributed to the upward trend, analysts are more inclined to believe that a weaker US dollar, coupled with developments on trade wars, is making gold pricier. There is also a growing expectation that the US Federal Reserve will cut the interest rates.

High demand for gold during Akshaya Tritya, an auspicious Indian gold buying day, as well as the wedding season, may have also pushed the rates higher, according to Vijay Valecha of Century Financial, adding that the trend is likely to continue this week, with 24K set to move higher to Dh164.80 per gram.

“Rising expectations for a Fed rate cut and European Central Bank (ECB) deciding to maintain the low interest rate policy through the first half of 2020 are supportive for gold price. Global inflation is subdued as commodities like crude oil have declined and this is good for the yellow metal since it is a non-interest bearing asset. At the moment, dovish global monetary policy is driving gold prices higher,” Valecha said.

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The precious metal had reached its peak this year at $1,346 an ounce in February 20 and eased between the end of February and late last month, according to a new analysis from ABN Amro. This was mainly due to a recovery of the American dollar.

The latest rate has breached the February peak and is the highest so far since August 2018, according to Reuters.

“In recent weeks, uncertainty on financial markets has increased because of the escalation of the trade tensions between the US and China, weakness in equity markets and higher uncertainty surrounding Brexit,” noted Georgette Boele, coordinator FX and precious metals strategy at ABN Amro.

“Initially, gold prices barely profited because the US dollar was resilient as well. [Recently] this changed however. A further escalation of trade tensions has resulted in a considerable drop in US nominal yields, a drop in US real yields, increased Fed rate cut expectations and a weaker US dollar.”

“Gold has moved up in an environment of higher equity market volatility and more uncertainty on financial markets, giving the appearance of a classic safe haven reaction. However, we strongly believe that the surge in gold prices has happened because of broad dollar weakness rather than safe haven demand for gold.”

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