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With the price of gold dropping by Dh1 per gram on Monday morning, is it time to buy or hold? Image Credit: Clint Egbert/Gulf News

Dubai: With the price of gold dropping by Dh1 per gram on Monday morning, commodity analysts currently evaluate how buyers can afford to wait a bit for prices to get a tad lower, as that is the expectation for the coming week.

In the UAE, the cost of 24-karat gold was at Dh217.50 per gram on Monday. Meanwhile, the price of 22-karat gold fell to Dh204.25 per gram, 21-karat to Dh195.0 and 18-karat to Dh167 in the UAE. Check the latest gold rates here.

Gold price trend
Gold rates seen in the past 10 days in the UAE, and globally. Image Credit: Dubai Gold and Jewellery Group

Gold prices dropped on Monday, weighed down by a rebound in the US dollar and expectations of further interest rate hikes from the US to tame high inflation - a move that will be followed by key economies worldwide.

Prices drop

Globally, spot gold price was down 0.6 per cent at $1,791.33 per ounce, as of 0704 GMT, after rising about 1.6 per cent last week. US gold futures - indicative of near-term prices - fell 0.5 per cent, which means prices are seen lower in the coming week.

"Gold looks like in some consolidation here for a week or two before resuming the upward march towards $2,000 yet again," said Clifford Bennett, chief economist at Australia-based ACY Securities.

"Gold is likely to be supported around $1,785. A slip to $1,760 cannot be ruled out, but this would represent a fantastic long-term buying opportunity."

Rate hike boost

Gold investors and buyers will be watching out for minutes from the US' last monetary policy meeting due on Wednesday for more clues on future rate hikes, and its resultant impact on gold prices.

Gold, jewellery, gold ornaments
Gold investors and buyers will be watching out for minutes from the US' last monetary policy meeting due on Wednesday for more clues on future rate hikes, and its resultant impact on gold prices.

Traders were pricing in around a 44.5 per cent chance of a 0.75 per cent rate hike by the US in September and a 57.5 per cent chance of a 0.50 per cent increase. Although gold is seen as a hedge against inflation, rising US interest rates dim non-yielding bullion's appeal.

"Gold recorded its fourth consecutive weekly gain amid easing inflationary pressures. However, those same issues may ultimately be a negative," analysts at Australia and New Zealand Banking Group wrote in a note.

Prices rise weekly

Gold recorded its fourth straight weekly gain last week as traders weighed further signs of easing inflationary pressures in key economies and hawkish remarks by central bank officials.

The precious metal has now rebounded more than 6 per cent from a low in mid-July on a combination of fears of a global recession and heightened US-China tensions over Taiwan. It's also been aided by declines in the dollar in recent weeks.

Despite the latest data out of the US, inflation remains stubbornly high around the world. That could force the US Federal Reserve and other central banks to stay aggressive with rates, keeping pressure on gold.

"The gold price has not managed to lastingly overcome the $1,800 mark this week," analysts at Commerzbank AG wrote in a note. "The ongoing tightening of monetary policy is still having a braking effect on gold as a non-interest-bearing investment vehicle."