Dubai: Gold prices fell to their lowest level in ten months this week, then rebounded slightly following a surge in buying activity.
The precious metal's downtrend is not yet over, according to analysts, with retail prices still trading 10 per cent lower than their peak levels during the wake of the US elections results, providing more buying opportunity for bargain hunters in Dubai.
As of 1.35pm, 24-karat gold was selling in Dubai for Dh142 per gram, which is about Dh16 cheaper than in November 8. The precious metal soared on Donald Trump’s elections victory, but investors had a change of heart and turned away from safe-haven assets.
Gold plunged to $1,157 an ounce on Monday, its lowest since February 5, according to Reuters. On Tuesday’s early trade, spot gold inched up 0.2 per cent at $1,172.30 an ounce.
Despite the slight bump, analysts remain pessimistic about gold’s performance in the coming days and in 2017, especially with the highly anticipated interest rate adjustment by the US Federal Reserve.
"It's mostly a wait-and-watch game for now, while some bargain hunters built up their buying positions," Karim Merchant, group CEO and managing director of Pure Gold Jewellers, told Gulf News on Tuesday.
In its latest monthly commodity update, ABN Amro said they remain negative on gold for next year and 2018.
"The sharp rise in US Treasury yields and US equity markets in an environment of positive investor sentiment triggered a substantial rally in the US dollar and caused a crash in gold prices,” the bank said.
“The price behaviour signals that every rally in gold prices is used as an opportunity by investors to unwind existing long gold positions. This is a negative sign to the gold price outlook for the coming year. We remain negative on gold for 2018.”
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