Dubai: Those who have been putting off buying gold jewellery due to high prices, may now be feeling safe to again start rounding up the shops for bargains.
The price of the bullion fell on Monday, as the US dollar strengthened and investors turned to safe-haven assets. Spot gold was down 0.2 per cent at $1,289 an ounce, according to Reuters, while 24-karat and 22K gold fell to Dh156 and Dh149 per gram, respectively.
Fans of the yellow metal in Dubai will now be spending about Dh6 less per gram when they buy new pieces today. Early last month, 24K was retailing at Dh162 per gram.
“Gold prices fell today on the back of strengthening dollar as the trade war between US and China was put on hold. However, we think the recent strength in the dollar is likely to weaken going forward,” said Vijay Valecha, chief market analyst at Century Financial Brokers.
The good news is that further declines are expected in the coming weeks or months, as prices of the precious metal have yet to hit the bottom. According to the latest analysis, prices could hit as low as $1,250 an ounce this year.
Gold prices have weakened by 5 per cent since April 11, 2018, breaking below the 200-day moving average at $1,307 and below what analysts would call the “psychological level” of $1,300 an ounce.
According to ABN Amro, gold prices fell due to a combination of a stronger US dollar and higher US yields.
“We expect gold price weakness to continue in the coming weeks and months. It is likely that gold prices will fall below $1,275 an ounce and test $1,250 an ounce this year followed by a stabilization,” wrote Georgette Boele, co-ordinator for foreign exchange and precious metals strategy of ABN Amro, in a research note.
Valecha, however, noted that the rally of the US dollar is now “over stretched” and that gold prices are nearing important support level from a medium-term perspective, hence, it is likely that the bullion could go back up.
“We saw some weakness coming in U.S. 10-year [Treasury yield] which has been hovering above 3.00 per cent mark. Hence, we feel over the course of the week prices might see a move on the upside,” explained Valecha.
“At current level, gold is certainly a good price to buy as in international markets prices have corrected by almost six per cent and further downfall seems limited. Also, it is estimated that major gold consumer India will be having a normal monsoon season and with a third of India’s gold demand coming from rural areas, global gold consumption should hold strong.”
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