Dubai: Despite earlier forecasts of continued decline this year, gold stood its ground fairly well on Tuesday even as stock markets staged a rebound following China’s weak economic data.
Analysts said investors are still seeking refuge in gold and other safe havens as other assets continue to accumulate losses.
By 2pm, Tuesday, the precious metal remained unchanged from Monday’s closing rates, with 24-carat gold trading at Dh131 per gram, 22K at Dh124.25 and 21K at Dh118.75. The price of 18K also steadied at Dh102 per gram.
Gold has so far gained Dh3 per gram this year, climbing 2.3 per cent from Dh128 in December 31st .
“With losses across other asset classes continuing to accumulate, gold is once again seen as the go-to commodity,” Ole Hansen, head of commodity strategy at Saxo Bank, said in a research note sent to Gulf News on Tuesday.
“Gold remains one of the few assets in positive territory as the carnage in global financial markets is showing limited signs of slowing down,” said Hansen.
He said that short-covering at the beginning of the year from funds exiting overextended short positions was the initial driver, but during the past week investors increased holdings in exchange-traded funds by the most since last January.
Gold had rallied into the weekend on weak oil prices and global stocks.
Other analysts had earlier forecast further declines this year, citing that the metal will likely hit $1,050 per ounce by the end of March 2016 due to higher US dollar, improved investor sentiment and higher US yields.
The precious metal took a beating in late 2015 on expectations that the US Federal Reserve would increase the interest rates before the end of 2015.
Karim Merchant, CEO of Pure Gold Jewellers in Dubai, insisted that the yellow metal remains volatile and is still poised for further declines.
“Gold price continues to be volatile since the beginning of the year. We have seen it rise in the beginning of the month and then fall [last week] and up again,” Merchant told Gulf News earlier.
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