LONDON: Gold rose to a four-month high on Friday and was on track for a fifth straight weekly gain as the dollar fell against the euro on an agreemement for a political coalition in Germany.
Spot gold rose 0.7 percent to $1,331.62 an ounce by 1102 GMT, having touched its highest since Sept. 15 at $1,333.02. The precious metal is up 0.9 percent this week and set for its longest run of weekly gains since April.
US gold futures were up 0.7 percent at $1,332.30. The dollar index , which measures the greenback against six major currencies, fell to its lowest since Sept. 11 at 91.308.
The euro jumped to a three-year high after party sources said that German Chancellor Angela Merkel’s conservatives and the Social Democrats (SPD) had agreed a blueprint for formal coalition negotiations. “This agreement of a coalition will change that situation of a hung parliament in Germany and that is why the euro is positive, weakening the US dollar, which is one of the reasons why gold is firmer this morning,” said Quantitative Commodity Research consultant Peter Fertig.
Friday’s news from Germany helped the euro to extend gains made on Thursday after minutes from a December European Central Bank meeting signalled that the ECB could begin to wind down its 2.5 trillion euro ($3 trillion) stimulus program this year. A stronger euro potentially boosts demand for gold by making dollar-priced bullion cheaper for European investors. “There was some strong buying out of China on Friday suggesting some physical demand ahead of Lunar New year,” said Stephen Innes, APAC head of trading at Oanda.
The dollar was pressured by data showing that producer prices in the United States fell for the first time in nearly 1-1/2 years in December amid declining costs for services. US Consumer Price Index (CPI) data is due later on Friday.
Among other precious metals, spot silver rose 0.9 percent to $17.13 an ounce, heading for its first weekly loss in five weeks. Silver is up 0.6 percent so far this week. Platinum rose 1 percent to touch its highest since Sept. 11 at $997, on track for a fifth straight weekly gain. Platinum is up 2.5 percent so far this week. Palladium was up 0.4 percent at $1,087.93 after dropping on Thursday to a more than one-week low at $1,075.50.
Gold price hits four-month high as dollar slumps
Gold price hits four-month high as dollar slumps
Global brands shut Middle East stores as conflict causes chaos
- Luxury brands and retailers close stores in Middle East
- Conflict threatens the region that has been luxury’s fastest growing
- Mass-market retailers monitor situation, adjust operations in region
PARIS: In Dubai and other major Middle Eastern shopping hubs, many stores are closed or operating with a skeleton staff as the escalating conflict in the region causes chaos for businesses and travel.
The US-Israeli air war against Iran expanded on Monday with no end in sight, with Tehran firing missiles and drones at Gulf states as it retaliates for a weekend of bombing that killed Iran’s supreme leader and reportedly killed scores of Iranian civilians, including a strike on a girls’ primary school.
Chalhoub Group, which runs 900 stores for brands from Versace and Jimmy Choo to Sephora across the region, said its stores in Bahrain were closed, while other markets, including the UAE, Saudi Arabia, and Jordan remained open though staff attendance was “voluntary.”
“We operate with a lean team formed of members who volunteered and feel comfortable to come to the store,” Chalhoub’s Vice President of Communications Lynn al Khatib told Reuters, adding that the company’s leadership team personally visited Dubai Mall and Mall of the Emirates on Monday morning to check in with workers.
E-commerce giant Amazon closed its fulfillment center operations in Abu Dhabi, suspended deliveries across the region and instructed its employees in Saudi Arabia and Jordan to remain indoors, Business Insider reported on Monday, citing an internal memo.
Gucci-owner Kering said its stores were temporarily closed in the UAE, Kuwait, Bahrain and Qatar and it has suspended travel to the Middle East.
Luxury growth engine under threat
Shares in luxury groups LVMH, Hermes, and Cartier-owner Richemont were down 4 percent to 5.7 percent on Monday afternoon as investors digested the knock-on impacts of the conflict.
The Middle East still accounts for a small share of global spending on luxury — between 5 percent and 10 percent, according to RBC analyst Piral Dadhania. But the region was “luxury’s brightest performer” last year, according to consultancy Bain, while sales of expensive handbags have stalled in the rest of the world.
Now, shuttered airports have put an abrupt stop to tourism flows into the region and missile strikes — including one that damaged Dubai’s five-star Fairmont Palm hotel — are likely to dissuade travelers, particularly if the conflict drags on.
“If you assume that it’s a $5 billion to $6 billion (travel retail) market and let’s say it’s going to be shut down for a month, we are talking about hundreds of millions of dollars that are definitely at risk,” said Victor Dijon, senior partner at consultancy Kearney.
If Middle Eastern shoppers cannot travel to Paris or Milan, that could also hurt luxury sales in Europe, he added.
Luxury brands have been investing in lavish new stores and exclusive events across the region. Cartier unveiled a “high-jewelry” exhibition in Dubai’s Keturah Park just days before the conflict started.
Cartier and Richemont did not reply to requests for comment.
Luxury conglomerate LVMH has also bet big on the region. Last month, its flagship brand Louis Vuitton staged an exhibition at the Jumeirah Marsa Al Arab hotel, and beauty retailer Sephora launched its first Saudi beauty brand.
LVMH does not report specific figures for the region, but in January Chief Financial Officer Cecile Cabanis said the Middle East has been “displaying significant growth.” LVMH did not reply to a request for comment on how its business may be impacted by the conflict.
The Middle East has also attracted new investment from mass-market players. Budget fashion retailer Primark said in January that it plans to open three stores in Dubai in March, April and May, followed by stores in Bahrain and Qatar by the end of the year.
“Primark is set to open its first store in Dubai at the end of March but clearly this is a fast-moving situation which we are monitoring closely,” a spokesperson for Primark-owner Associated British Foods said.
Apple stores in Dubai will remain closed until Thursday morning, the company’s website showed, while Swedish fast-fashion retailer H&M said its stores in Bahrain and Israel are closed.
Consumer goods group Reckitt has told all employees in the Middle East to work from home, temporarily closed its Bahrain manufacturing site and suspended all business travel to the region until further notice.
