Dubai: Gold inched up a bit on Tuesday and Wednesday as the stock markets and the US dollar retreated, but was still trading much lower than its peak price last month.
The recent price movement has also been attributed to the tension in the Middle East, with Turkey recently downing a Russian plane near Syria.
As of 6pm on Tuesday, 24-carat gold was retailing in Dubai at Dh129.25 per gram, 50 fils higher than a day earlier.
It edged higher on Wednesday morning to Dh129.75, gaining another 50 fils, but the latest rate is still Dh11.75 lower than the highest recorded price in October at Dh141.50 per gram.
Spot gold increased 0.4 per cent at $1,073.60 an ounce as of 1234 GMT, Tuesday and moved higher to $1,078.72 by 0331 GMT on Wednesday.
The bullion’s weakness has been due to rising expectations that the Federal Reserve in the United States will increase the interest rates for the first time since 2006, as the American economy has strengthened.
The US in October added more jobs than earlier expected. Pro-interest rate hike sentiments are likewise pushing the US dollar higher recently, which is also impacting gold prices.
The Federal Open Market Committee meeting is expected to take place next month.
Olen Hansen, head of commodity strategy at Saxo Bank, said that with the Fed expected to meet in just under four weeks, he sees “limited upside to precious metals”, including gold, during this time.
“The market will be headline-driven and barring any major geopolitical event, these headlines should mostly be gold negative, considering the intense focus on the rate hike,” Hansen said in a note sent to Gulf News on Tuesday.
“The short-term upside potential for gold seems limited to $1,110 per ounce while the 2010 low at $1,045 per ounce will provide the first major level of downside support,” Hansen added. -- With inputs from Reuters
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