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Analysts bet on gold to move higher this week

Next resistance level on the upside is $1,300 an ounce

Image Credit: Bloomberg
Many investors see gold as a good hedge against inflation.

Dubai: Gold prices have inched up recently, but jewellery buyers in the UAE are still likely to find some bargains.

The price of 24-karat gold stood at Dh155 per gram as of 9.40am on Sunday, down by Dh2 per gram when compared to its peak of Dh157 last November 29.

In the global market, gold was last trading at a high of just a little over $1,289 an ounce on December 1, up from $1,285.27 last November 30.

Gold had in recent weeks nearly broken the $1,300 level when it hit $1,296.70 on November 29.

Some analysts, however, are still bullish on the precious metal, which they see moving higher in price this week.

Gold’s latest price movement has been supported by a weak US dollar.

“Gold is negatively correlated with the external value of the US dollar, so that a US dollar appreciation is often associated with weakness in the price of gold ,” Dr Marie Owens Thomsen, chief economist, Indosuez Wealth Management, told Gulf News.

“The recent move from $1.16 to 1.19 versus the euro is gold-price supportive,” she added. “As a safe-haven asset, the gold price also tends to benefit from geo-political tension. This is arguably neutral going into the year-end unless tensions with North Korea intensify or other issues flare up.”

In a survey conducted by Kitco, nearly six in ten (58 per cent) of respondents in the Wall Street said they are expecting gold to strengthen this week. The same view is shared by the majority (46 per cent) of professionals in the Main Street.

Thomsen said their outlook is likewise positive on gold, adding that if the current support level of $1,272 an ounce is not broken, the next resistance level on the upside is $1,300 an ounce.

“Our target for 2018 is $1,350 an ounce. On the downside, if the current support brakes, the next level would be around $1,250 an ounce.”

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