Dubai: Gold fans in the UAE now get the chance to stock up more on new ornaments at a more affordable rate, with jewellery prices dropping to their lowest level in more than four months.
Commodities took a beating on Friday following a rally staged by the US dollar against other currencies, including the Japanese yen, Euro and Swiss francs.
“Gold prices have slumped to a four-month low, taking the support it had created in July this year,” Vijay Valecha, chief market analyst at Century Financial Brokers, told Gulf News.
“Today’s price is the lowest it has been since July 26th. It looks like gold is under downward pressure,” added Karim Merchant, group CEO and managing director of Pure Gold Jewellers.
As of past 1pm on Sunday, 24-karat gold jewellery in the UAE was trading at Dh151.25 per gram, the cheapest since late July. The rate is lower by Dh6.50 per gram from gold’s most recent peak of Dh157.75 per gram last October 16 and cheaper by more than Dh2 per gram from just a few days earlier.
In the global market, spot price had dropped to $1,243.32 an ounce on Friday, as the US dollar, along with equities and bond yields, moved higher. The last time gold was trading slightly higher was in July 26, when the bullion hit a low of $1,243.95 an ounce.
"“Positive data from the US economy has triggered this fall in price, and I expect gold to test the $1,240 mark in the coming few days,” Merchant added.
Gold’s performance is also tied to the US dollar. A strong American currency means lower bullion rates, and if recent speculations were correct, prices may yet again move lower before the end of the week.
In his latest note, Max McKegg managing director at Technical Research Limited, said the greenback “may get another boost after the [US Federal Reserve’s] meeting winds down on Wednesday.”
“The US [dollar] surged to a new local highs before a tepid US jobs report and disappointing average hourly earnings figures for November held the big dollar back from further gains,” said John Hardy, head of FX strategy at Saxo Bank.
The US Federal Reserve is expected to increase the interest rate this week. “Gold prices look further bearish as a Fed rate hike is expected this week, which should move the US dollar and US equities higher. Gold has its next support levels at $1,235 and $1,221. These are the levels that could be tested this week,” said Valecha.
For next year, some analysts are betting on the precious metal’s outlook to be less rosy compared to this year, when gold prices rallied by 11 per cent. According to Georgette Boele of ABN Amro, gold prices are likely to move towards $1,250 an ounce in 2018.
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