Dubai is a favoured destination for those looking to buy gold during auspicious occasions such as Diwali Image Credit: © Matilde Gattoni/arabianEye/Co

Dubai: Gold prices continued to trend lower as Diwali celebrations kicked into high gear on Thursday, with jewellery rates registering a week-on-week decline of Dh2.25 per gram.

The precious metal has recently been bearish and for three consecutive days this week, prices have been on a downward path. It had a bullish run earlier, having crossed the $1,300 level on Monday, but failed to sustain its strength.

Spot gold hit a low of $1,276.31 an ounce before noon, down from Wednesday’s peak of $1,288.85.

As of 11.32am, 24-karat gold in Dubai fell to Dh154.75 per gram from Dh155 the day earlier. Further dips were recorded for other jewellery pieces, with 22K retailing at Dh145.50 per gram, 21K at Dh138.75 and Dh18K at Dh119.

“Gold continues its weakness in the Diwali week, as almost all global equity markets are creating new highs on a regular basis,” said Vijay Valecha, chief market analyst at Century Financial.

“Gold is always considered as a safe haven to equities and bonds and usually has a negative correlation to these markets.”

But it looks like the weakness won’t last much longer, especially considering that the US dollar is showing indications of bottoming out and an interest rate adjustment by the US Federal Reserve before year-end is still very much in the picture.

“The US dollar has shown signs of bottoming out, expecting a Fed rate hike in December. This move on gold and the US dollar is seen as a temporary move and we remain bullish on gold in the medium to long term,” Valecha said.

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