Dubai: Gold jewellery fans in the UAE may continue to score some bargains, but the precious metal could again post some significant gains before the end of the year.
According to the latest analysis, the precious metal could post further price declines before picking up strength to hit an average of $1,300 by the end of 2017.
“Gold prices could decline towards $1,250 per ounce,” sad Georgette Boele of ABN Amro in her latest note. “We expect gold prices to bottom out close to $1,250 per ounce and to move higher again,” she added, citing that US real yields are expected to edge lower and the US dollar to weaken again at the end of 2017 and 2018.
The bullion inched up slightly on Wednesday, pushing jewellery prices higher by approximately .50 fils. As of 10am, 24K was retailing at Dh154.50 per gram, up from Monday’s closing rate of Dh154. Other jewellery pieces moved higher, with 22K selling at Dh145, and 21K and 18K trading at Dh138.50 and Dh118.75, respectively.
Spot gold rose 0.3 per cent to $1,275.10 an ounce by 0049 GMT, as the dollar weakened, according to Reuters. The precious metal fell to its lowest since mid-August at $1,267.76 on Tuesday.
As there is now less focus on geopolitical risks, factors that could affect gold prices over the next few days or weeks will include the performance of the US dollar, talks of another interest rate increase before the end of the year and taxation in the United States, among others.
“Gold has fallen to a six-week low in response to rising US yields and a stronger dollar. The anticipation of a December rate hike, US tax reform plans, together with data showing US manufacturing expanding at the fastest pace in 13 years have further reduced the focus on geopolitical risks,” noted Ole Hansen, head of commodity strategy at Saxo Bank.
“With stocks at a record high, the VIX [volatility index] at a record low, and geo-risks at least temporarily fading, demand for diversification and tail-end risk protection have faded during the past couple of weeks.”
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