Dubai:  The bullion inched up a bit on Monday but bargains still await gold fans in the UAE, with the metal still retailing about Dh20 per gram lower than a month earlier.

Historical data showed that between November 8 and December 16, the price of 24-karat gold in UAE dropped by 13 per cent, from Dh158 to Dh138 per gram.  It was during the wake of the US elections results when the metal surged, but later dropped as investors changed tack.

Daily price comparison, however, showed a slight uptick, with the spot rate in Asian trade settling at $1,137.10 an ounce on Monday, by 0.3 per cent from the previous close.

Analysts are still betting on the precious metal to remain weak towards the end of the year.  Karim Merchant, CEO and managing director of Pure Gold Jewellers said, there is no strong rally in sight for the precious metal yet.

“Gold price in the medium term will continue to be under pressure with patches of bargaining buying which will bring in the much-needed volatility favoured by financial institutions,” Merchant told Gulf News.

“As we approach the end of the year holiday, we expect fewer market participants.”

The Federal Open Market Committee (FOMC) of the US Federal Reserve decided to increase interest rates this month and hinted at two more adjustments in 2017, causing the precious metal to plunge to a 10-month low.

“The [decision] helped extend the dollar rally while ending US bond 10-year yields to a 27-month high. The outlook for three additional rate hikes in 2017 was the driver behind these moves as it was more hawkish than what was expected,” explained Ole Hansen, head of commodity strategy at Saxo Bank.

“As a result, precious metals were knocked lower, thereby extending gold’s losing streak into a sixth week. The hawkish tone helped reduce the future inflation risk expectations and as a result, the real yield jumped to 0.7 per cent after averaging 0.25 per cent this past year.”

“Rising real yields in an environment of rising dollar and stocks removed the appeal of gold as an alternative investment and this is the situation that the metal is currently adjusting to.”

Hansen, however, noted that the US dollar is already overbought, while bonds are oversold. “And this development, combined with support at $1,125 per ounce, could help trigger some consolidation.”

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