Dubai: More bargains still await precious metal fans in Dubai and across the UAE, as the bullion posted its biggest decline in 24 hours.
The precious metal dropped 1.2 per cent on Monday, the biggest fall in one day since August 15, before recovering slightly on Tuesday. The metal also registered a more than a week low of $1,183.19 an ounce, according to Reuters.
In the UAE, 24-karat gold was still priced at Dh144.25 per gram as of 10:17am, down by Dh1.50 compared to Sunday’s rate.
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Current retail prices are also far cheaper compared to last April’s record of Dh162 per gram, data posted by Dubai Gold and Jewellery Group show.
According to Vijay Valecha of Century Financial, the one percentage ratio cut by China has been blamed for the latest decline in the price of gold.
“The cut was quite steep by Chinese standards and has triggered fears that Chiina’s Renminbi might weaken against the US dollar. Generally, gold weakens when the US dollar strengthens,” Valecha said.
“Nevertheless, those fears might be overblown as the International Monetary Fund (IMF) has reduced global economic growth forecast for 2018 and 2019. This is the first downgrade since July, 2016 and 2018 growth has now been forecast at 3.7 per cent instead of 3.9 per cent anticipated earlier.”
“It remains to be seen whether the US Federal Reserve will hike aggressively under these circumstances. As we know, gold has traditionally being a hedge against economic uncertainty and this means that prices remain supported.”
However, the recent gain posted by gold on Tuesday has something to do with short-term demand from investors.
“Some short-term haven demand is supporting gold prices at current levels because of risk aversion due to ongoing trade wars, political developments including in Italy and outflow of money from the equity markets,” Mark To, head of research at Hong Kong’s Wing Fung Financial Group, told Reuters.
“However, the monetary policy by the U.S. Federal Reserve is dominating the whole equation, putting downward pressure on gold... The $1,200 level should be the centre of gravity for gold prices to sway back and forth.”