Dubai: The price of gold continued to drop over the weekend as the uncertainty remained over when the US Federal Reserve would increase the interest rates.
As of Sunday, 11:39am, 24 karat was retailing at Dh160 per gram in Dubai, down by Dh3.50 compared to the beginning of the month. Other gold pieces were also trending down, with the 22K trading at Dh150.25 and 21K and 18K selling at Dh143.50 and Dh123 per gram, respectively.
Janet Yellen, the head of US Federal Reserve, hinted on Friday that the rates will be adjusted this year, citing that the case for an increase “has strengthened in recent months.”
It is not clear, however, when the rates will be changed. The Fed committee is due to meet next month and in November, but there are speculations that no adjustments would be implemented right before the American elections.
The majority of the analysts and traders at Wall Street (46 per cent) who participated in Kitco’s weekly poll, however, are expecting the bullion to trade lower this week. A smaller number, nearly four out of ten of them (39 per cent), are bullish.
Ole Hansen, head of commodity strategy at Saxo Bank, also said on Sunday that it has become increasingly clear during the past couple of weeks that the precious metals market is running out of steam.
“In the case of gold, the losses have so far been limited. Just like back in May 9 when gold last corrected), we have seen hedge funds as net-sellers for the past few weeks while investors using exchange-traded products have been buying into the weakness,” Hansen wrote in his analysis on Sunday.
Hansen had earlier noted that gold has increasingly found it difficult to make any decisive move in either direction since the post-Brexit rally. During this time, the price of gold has been averaging $1,340 an ounce, a level that has been touched in 12 out of the last 14 trading days.
“Following the post-Brexit surge, gold has settled in a relatively tight range with the market gravitating around $1,340 an ounce. While the underlying fundamental support from compression of global interest rates continues, the market has increasingly been looking for confirmation that this year's strong rally can be maintained,” Hansen pointed out.
