Dubai: The yellow bullion will continue to weaken in the early part of 2016, with prices forecast to break below $1,000 an ounce, but gold bugs have a reason not to lose hope.
Rolf Schneebeli, CEO of Gold Services AG, said that the precious metal could regain some of its lustre anytime, especially if inflation fears resume.
“In the US, we already see the economy starting to perform nicely, including an increase in inflation. When the European economies do the same [perhaps] in one to two years, then we could see the inflation fear coming back to the market and the trend of the gold price might change,” Schneebeli told Gulf News. “In the meantime, gold will react to any political issues,” he added.
Gold prices have fallen significantly due to rising expectations of a Federal Reserve interest rate increase, coupled with a stronger US dollar.
As of Thursday morning, 24-carat gold was retailing in Dubai at Dh128 per gram, down by Dh1.50 from Sunday and Dh13.50 from October’s peak price. The price for 22K was pegged at Dh121.25, while 21K and Dh18K traded at Dh116 and Dh99.50, respectively.
Some analysts are expecting the bullion not to make much headway next year. Prices have been forecas to breach the $1,000 level in the early part of 2016 on firmer dollar and prospects of further interest rate increases in the United States.
Karim Merchant, group CEO and managing director of Pure Gold Jewellers, said prices will hover at $900-1,000 range in the first quarter of 2016.
“Further expected increase in interest rates by the Fed and continued improvement in the US economy will remain the main two reasons of further fall,” Merchant told Gulf News.
“For 2016 at least, it looks like gold will be around current levels or below. However, we must consider that the world markets are really dynamic,” he added.
Spot gold was trading at $1,062.20 an ounce by 0645 GMT on Thursday, according to a Reuters report.
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