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Will gold stick to $1,300 an ounce?

Spot gold has broken the $1,300 level, while jewellery rates have increased by Dh20 per gram since January

  • A man works on a six-kilogram gold crown. Image Credit: Bloomberg
  • A display at a shop in Dubai’s Gold Souk. Image Credit: Zarina Fernandes/Gulf News

Dubai: The price of gold has so far gained 15 per cent in value this year and if analysts were to be believed, the uptrend will likely continue over the long term.

The bullion, as well as jewellery prices in Dubai, has reached its highest point in less than 12 months, with the precious metal breaching the trading range and hitting more than $1,300 an ounce on August 28.

As of Sunday, the price of 24K gold jewellery in Dubai stood at Dh160.50 per gram, up by a massive Dh21 per gram from the beginning of the year and Dh1 from Tuesday last week. Spot gold was valued at $1,324.46 an ounce by 1759 GMT on Friday after hitting $1,328.80 an ounce, according to Reuters.

In its latest analysis, ABN Amro said it has revised its year-end gold price forecast, citing that it now expects the yellow metal to continue trading at the $1,300 level, up from $1,210 per ounce.

“We had expected gold prices to bottom out close to $1,200 per ounce, but we didn’t foresee this sharp rally in gold prices we have seen so far,” wrote Georgette Boele, coordinator FX and precious metals strategy at ABN Amro.

“The longer term gold price outlook should be positive,” she added. “A weaker US dollar, lower US Treasury and US real yields and geo-political uncertainty have been important drivers for the surge in gold prices.”

Ole Hansen, head of commodity strategy at Saxo Bank, said they maintain their end-of-year target at $1,325 an ounce.

“Precious metals received a boost as gold finally managed to break resistance at $1,300 an ounce, thereby producing the best monthly performance since January,” he said in his latest analysis.

“Support, apart from the technical buying triggered by the break higher, has come from doubts over US debt ceiling and tax reforms, as well as continued geopolitical tensions.”

“Support also came from the dollar which reached a (two-and-a-half) year low against a basket of 10 leading currencies before attempting a tentative recovery.”

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