Dubai: The precious metal continued to take a beating from heightened interest rate expectations in the US, with prices falling to their lowest level in 10 months on Monday.
In Dubai, 24-karat gold was retailing at Dh140.25 per gram as of 12.15pm Monday, down by a whopping Dh17.75 per gram in November.
Karim Merchant, managing director and CEO of Pure Gold Jewellers, said the yellow metal is expected to touch as low as $1,000 an ounce by the first quarter of 2017.
"Gold prices are the lowest in 10 months and is expected to be under pressure due to change in Fed monetary policy," Merchant told Gulf News.
Spot gold had dropped on Monday to $1,153.93 an ounce, the lowest since February 5, before inching up a bit by 0.1 per cent on the same day, according to Reuters.
The bullion has been on a decline since November, as the US dollar, bond yields and equity markets strengthened following the election of Donald Trump in the United States. Trump’s promised policies are seen to trigger inflation, and thus, coupled with strong economic data in the US, further reinforcing the argument for a rate adjustment by the Federal Reserve.
With the rate increase nearly a certainty, investors have consequently moved away from safe-haven assets.
Total holdings in exchange-traded products backed by the precious metal has declined by 164 tonnes since November, while hedge funds have cut bullish bets significantly since the July record, according to Ole Hansen, head of commodity strategy at Saxo Bank.
“Bullish gold bets have now been reduced by 71 per cent since the July peak with the current net-long at 80,814 lots being close to the give-year average,” said Hansen in a note on Monday.
