Latest Dubai gold prices: Bullion drops nearly 2% in four days

Dubai: After showing a strong start of the year, gold lost its shine again, with the bullion prices dropping nearly 2 per cent in four days.

The precious metal is forecast to weaken further on the back of positive investor sentiment and US economic data, and rising greenback. However, prices are unlikely to hit as low as $975 per ounce by the end of March.

ABN Amro, in its latest analysis published on Tuesday, said it had revised its gold forecast, saying that the metal is expected to trade instead at $1,050 per ounce by the end of March 2016.

“We expect gold prices to move lower because of a higher US dollar, improvement in investor sentiment and higher US yields this year,” Georgette Boele, coordinator FX and precious metals strategy at ABN Amro, wrote.

As of 10am on Wednesday,  24-carat gold was retailing in Dubai at Dh130.50 per gram, down by Dh2.50 from January 10. The price for 22K stood at Dh123.75, while 21K and 18K traded at Dh118.25 and Dh101.50, respectively.

Weak prices have also been attributed to expectations of another interest rate increase by the US Federal Reserve. Spot gold dropped 0.2 per cent to $1,084.20 an ounce by 0347 GMT, according to a Reuters report.

A rise in safe-haven demand, triggered by the turbulence in Chinese markets, coupled with the rising Saudi-Iran tension, had earlier pushed gold prices higher in the first few days of the year.

“Gold has started 2016 on the attack, with prices heading higher, particularly when priced in yuan. Safe-haven bids and lower bond yields related to the tensions in the Middle East, combined with the Chinese troubles and yuan devaluation, have all helped attract buyers,” said Ole Hansen, head of commodity strategy at Saxo Bank.

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