Dubai: Gold jewellery prices in Dubai spiked higher on Monday, as the US dollar plunged in the aftermath of the recent US Federal Reserve rate adjustment.
The bullion retailed on Monday by as much as Dh10 per gram when compared to the prices in the beginning of the year, with the 24K selling at Dh149.50 per gram, down from Dh139.50 in January 1.
Also on the same day, spot gold rose to its highest in two weeks at $1,234.60 before settling at $1,233.60 by 0310 GMT, according to Reuters.
Some analysts expect that the yellow metal will continue to be supported, with the spot price forecast to range between $1,220 and $1,240 an ounce. Others, however, are forecasting the price to range between $1,175 and $1,375 an ounce this year.
Gold’s strong showing is partly a result of the continued decline in the greenback, which has touched a five-week low after the Fed raised interest rates for the third time since June 2006.
"Gold is testing higher ground due to dovish tone from Fed on interest rate increase for the rest of the year, coupled with short-term covering speculations. I strongly feel gold price will take its direction based on Fed interest rate policy," Karim Merchant, group CEO and managing director of Pure Gold Jewellers, told Gulf News.
“The market had feared a much more hawkish tone from Fed chief Janet Yellen after strong recent economic data. The dovish rate hike, as it turned out to be, triggered short-covering and gold returned to relative safety above $1,221 an ounce,” said Ole Hansen of Saxo Bank.
Although the Dutch election is over, there are still geopolitical risks in Europe and the attention is now focused on the French presidential polls. The latest trend suggests that French far-right candidate Marine Le Pen is ahead of over centrist Emmanuel Macron.
“Such news will add some support to gold, not least when priced in euros,” noted Hansen.
“While we await further developments, gold is likely to settle into a range between $1,220 and $1,240 an ounce. After gold survived another US rate hike and some stiff headwinds during the past few weeks, we sense that underlying demand, albeit not strong at this stage, will keep the market supported.”