Dubai: Gold fans in the UAE should brace for more price increases this year, with the yellow metal forecast to jump by approximately Dh10 per gram.
The value of gold surged on Thursday on rising speculations that there won’t be any Federal Reserve interest rate increases for the time being.
Spot gold hit $1,295.84 an ounce by 9:56am, triggering price increases across jewellery stores in Dubai. The selling rate for 24-karat gold climbed Dh2 to Dh157 per gram.
Buyers of 22k, 21K and 18K gold will now be spending more, with prices rising to 147.25, Dh140.75 and Dh120.50 per gram, respectively.
Analysts said gold fans should brave for more price increases this year, as the precious metal is headed for a bullish breakout.
The metal is likely to rise further and surpass the $1,300 level, according to Reuters technical analyst Wang Tao.
Vijay Valecha of Century Financial said the price of 24K could very well climb to Dh167 per gram this year. That’s a Dh10 rise per gram from today’s price, which means that the future buyer would be paying about Dh200 more on a 20-gram necklace.
The bullion is not only riding on the back of interest rate speculations. Investors are turning to the safe haven asset due to the trade war between the world’s two biggest economies, United States and China.
“Gold is likely to perform well this year as trade war concerns and the likely end of the global business cycle in next two years increases the safe haven attraction of the yellow metal,” Valecha told Gulf News.
“Globally, gross domestic product (GDP) growth forecasts for all the major economies have been reduced and this could force major central banks to back off from tightening of monetary policy,” he added.
According to the CME FedWatch tool, which predicts future interest rates, there could only be one interest rate increase this year.
“This signals a Fed that is getting dovish. US dollar fundamentals are getting weakened due to a slowing economy as well as fiscal deficit that is ballooning,” said Valecha.
“The euro on the other hand, seems to have priced in all the worst-case scenarios like Brexit and Italian budget rift, thus creating the perfect recipe for a rally against US dollar."