Brexit vote boosts gold prices in Oman as people seek safe haven for investments

Oman (Jun 29)  Gold is the safest investment in volatile markets, said experts and officials in Oman after the sudden hike in prices due to the Brexit effect.

Last Friday, gold prices increased 5.5 per cent for a gram following the Brexit vote, which created a new range for the precious metal in recent times, which is now showing some signs of an imminent drop.

“Gold is often perceived as a hedge against economic and financial risk,” Jose Chacko, an analyst in Muscat told the Times of Oman (TOO).

“Gold prices will trend higher in the third quarter as the full ramifications of Brexit begin to be felt, but expect it to fall again in the fourth quarter after the U.S. election and as the Fed (U.S. Federal Reserve) gets ready to hike again,” another market expert said.

On Friday, the rate for one gram gold increased to OMR16.35 from Thursday’s price of OMR15.50, after a majority of British voters chose to leave the European Union (EU). The reason for the increase in prices was investors wanting to put their money into so-called safe assets, according to experts and some jewellery shop employees.

“The outcome of the Brexit polls caught the financial markets off-guard and sent investors running toward the precious metal,” a market expert noted.

The price for one gram of gold has dropped to OMR16.15 on Wednesday, compared with Friday. “The rise in price was a short term after effect of Brexit; gold is seen as a safe haven at times of market turmoil,” he stated.

According to Anto Ignatious, country manager for jewellery brand Joy Alukkas, the price hike has not affected their sales so far.

“We are having normal business all around the country; there is neither a drop nor a rise in our sales,” Ignatious told TOO.

He further stated that experts in the market predict that prices may surge further at the end of this year. “This is the best time to invest in gold as the experts predict a hike in the price,” Ignatious asserted. “Even though there is no huge increase in sales as many residents are out of the country on vacation.”

According to Najeeb K, Oman regional head for jewellery brand Malabar Gold and Diamonds, there is a chance of a price increase in the coming days.

“I expect the precious metal to move on a volatile path, but there are indications that prices could continue to trade higher and test the $1,450 for an ounce (limit) before the end of the year,” an official in the jewellery business, who was unwilling to be quoted, said.

“We witnessed a pickup in our sales as the price started to fluctuate due to Brexit,” he added.

“I bought it (gold) in the fear that the price may go up further in the coming days and if it goes up it will be a safe asset to earn more money at that time,” Roy Mathew, an Indian businessman in Muscat told TOO. “Gold may see some ups and downs; still it is the safest investment from a long term perspective, which made me to invest in it,” Mohammed Gafoor, another businessman said.

“We already had a plan to buy some gold this Eid, but when we came to know that the price may rise in the coming days, it made us buy it early,” a homemaker said.

Jewellery shops in Oman have also announced a lot of offers and bumper prizes for Ramadan customers to celebrate Eid-Al-Fitr.

Joy Alukkas is gifting an Audi car to one of its lucky customers as a bumper prize for this Eid-Al-Fitr. “A customer, who is spending more than OMR50, will earn a raffle coupon and a lucky one will get an Audi A3; 8 gram coins will also be given to five other lucky winners,” Ignatious said.

Malabar Gold and Diamonds is offering its customers the chance to win up to 10 kilograms of gold with every purchase of OMR50.

Source: TimesOfOman