Latest gold prices in UAE: Bullion rallies as markets, oil plunge

Dubai:  Gold had a field day on Thursday, with retail prices in Dubai and the global markets hitting a new high for 2016 after Asian stock markets plunged and oil prices plummeted.

Dubai prices registered a little over Dh4 increase per gram compared to last month, as the bullion soared above $1,100 per ounce for the first time in about two months.

Gold has been in a positive territory since the beginning of the year. Price movements have also been attributed to heightened tensions between Saudi and Iran.

By 12 noon, 24-carat gold was trading at Dh132.25, up by Dh4.25  from December 31, though still below its peak price recorded in October.

Analysts, however, are split as to whether the recent rally is only temporary. Some said the bullion is still expected to weaken for the most part of 2016.

“Gold prices will remain volatile and is moving in the expected range considering political tension, performance of equity markets and oil prices, which all continue to have an impact on short-term movement of gold prices,” Karim Merchant, group CEO and Managing director of Pure Gold Jewellers, told Gulf News.

“However, when we take a more medium-term view, gold is expected to soften should [the US Federal Reserve] continue to increase the interest rate.”

For Ole Hansen, head of Saxo Bank's commodity strategy, further price upswings are expected should the markets fail to stabilize. There will be some weakness when the uncertainties go away, but Hansen forecasts gold to still move higher during the latter part of 2016.

"Gold has retraced to its first major level of resistance at $1,102 and if the market turmoil continues, it could target $1,119 next. The initial focus US rate hikes that prevailed at the end of last year has been replaced by focus on stocks and China (CNY) weakness," Hansen told Gulf News.

"We see gold higher during the latter part of the year and it has been surprised by the strength witnessed so far. Once the current uncertainties fade, we could see some renewed weakness in gold, but the downside should be limited to between $1,000 and $1,050."

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