Dubai: Gold is expected to register further price declines towards the end of the year, but will not go lower than the $1,100 level, according to the latest analysis.
Dutch bank ABN Amro has revised its year-end gold forecast from $1,000 to $1,100 per ounce, citing that the US dollar is likely to be weaker than earlier expected, while the United States Federal Reserve is seen to adjust the rates only in 2016. By the end of next year, gold is expected to drop to $900, instead of $800.
The precious metal has not reached this year’s bottom yet, so there will still be further price adjustments over the next few days or weeks.
“This does not mean that we have seen the low in gold prices. We still expect the Fed to hike interest rates next year and the US dollar to rally in an environment of positive investor sentiment,” wrote Georgette Boele, coordinator, foreign exchange and precious metals strategy at the bank.
The bank has downgraded the US dollar forecasts for the rest of the year, with the EUR/USD expected to trade within the range 1.10-1.15.
“This should be gold supportive,” said Boele. “Periods of more constructive investor sentiment will likely push gold prices below $1,100 per ounce, while some deterioration combined with US dollar weakness prices above again.”
Gold rose significantly on Friday, October 9, following reports that the central bank won’t adjust the rates yet. Spot gold went up 1.6 per cent at $1,156,70 an ounce at 1844 GMT on Friday, after hitting a peak of $1,159.80 – the highest since August 24, according to a Reuters report.
In Dubai, 24-carat gold was retailing at Dh139 per gram, up from Dh137 a week ago. The price for 22-carat gold was pegged at Dh132, while 21K and 18K stood at Dh126.50 and Dh109.50 per gram, respectively.
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