Dubai:  After posting a slight decline on Monday, retail gold prices remained steady on Tuesday as the US dollar strengthened and speculations about another Fed rate hike later this year cropped up.

As of Tuesday afternoon, 24-carat gold in Dubai was retailing at Dh136.50 per gram, up from Dh136.25 on Monday. The price for 22K stood at Dh129.75 compared to Dh129.50 in previous trading, while 21K and 18K gold remained steady at Dh124.25 and Dh107.50, respectively.

The latest prices are still slightly lower compared to last week, when gold registered strong gains following the Federal Reserve’s decision not to increase the interest rates.

The precious metal had recently benefited from the Fed’s announcement that it is standing pat on the interest rates, with the global price rising to a near three-week high of $1,141.50 last week.

The bullion, however, dropped 0.5 per cent on Monday. As of 0634 GMT on Tuesday, spot gold was little changed at $1,133.01 an ounce, according to a Reuters report.

Federal Reserve officials have indicated that there could still be an increase in rates later in 2015. “We are quite concerned that the Fed’s message has come through as relatively muddled this past week given that most governors have expressed a willingness to raise rates by year-end,” Edward Meir, INTL FCStone analyst was quoted in a Reuters report as saying.

Some analysts, however, are saying that gold’s rally is only short-lived, with prices still expected to drop further this year.

Ole Hansen of Saxo Bank, said that gold, as well as silver, received a boost from the Fed’s decision to defer interest rate increase, “at least for another month.”

“Speculative short positions were covered once again just like in August when the Chinese devaluation triggered renewed demand for alternatives such as gold. Having managed to find support earlier than during the July sell-off the key to further progress will be determined by the metals’ ability to break the August high at $1,170,” Hansen wrote in his latest analysis.

“Such a break would, from a technical perspective, give an early indication that a low has been established. However, until such time and with the uncertainty of the timing of when Janet Yellen eventually will pull the rate hike trigger the upside seems limited at this stage. Not least considering the continued lukewarm attitude to gold from paper investors such as hedge funds and money managers”.

According to ABN Amro’s forecasts, the price of the bullion will trade hands at $1,000 an ounce by December this year. Prices will fall further in the coming year, with the rate hitting as low as $800 by December 2016.

-- With reports from Reuters

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