Dubai: Gold bears have been proved right once again. In the back drop of a rate hike in the US, gold on Monday slumped to its lowest level in five years to near the keenly-watched $1,000 an ounce. And analysts fear the worst is yet to come.

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On Monday, international spot gold slumped more than $45 to $1,088.05 an ounce, a level not seen since March 2010, slumping more than 15 per cent since June 2014, when gold traded at $1,300.

“The immediate cause [for the decline in gold prices] is linked to statements from China about reserves. But bigger picture is that Fed is about to raise rates and that’s bad for gold. We expect $1,000,” Giles Keating, managing director, head of research and deputy chief investment officer, Credit Suisse told Gulf News.

Analysts say gold might witness the elusive sub-$1,000 levels later in the year.

“Fundamental wise, gold has a bearish outlook as Fed gets ready for a rate hike. The geopolitical risks have been diluted with the Iranian deal or Greece issue, so that leaves us with no fundamental reason to be on the buying side,” said Pradeep Unni, senior relationship manager with Richcomm Global.

The geopolitical risks have also tapered off with Iranian deal and also a debt deal for Greece.

Meanwhile, due to weak underlying, mining stocks also retreated. AngloGold Ashanti Ltd. declined 5.2 per cent. Sibanye Gold Ltd., the biggest producer in South Africa, sank 6.2 per cent. The nation’s index of gold mining stocks fell to the lowest since April 2001.

Limited fall in silver:

“Silver was not part of the sell-off, but since silver is also a part of industrial metal complex it may not fall as much as gold to recovery in some economies in the world primarily the US,” Unni said.

Silver in international spot market fell 0.85 per cent lower at $14.76 an ounce.

Silver is expected to be in range of $14-16.50 for a few months, Unni said. Platinum also fell 0.62 per cent to be at $988.05 an ounce. Palladium also fell 1.10 per cent to be at $608.60 an ounce.