A salesman counts money in the Gold Souk in the Deira district of Dubai, UAE. Image Credit: Bloomberg

Dubai: If you were wondering whether to buy gold now or wait for a better price, analysis suggests holding off any big purchases as trends indicate a bigger drop in the weeks to come.  

In the UAE, the cost of 24-karat gold was at Dh209.25 per gram on Monday. Meanwhile, the price of 22-karat gold fell to Dh196.50 per gram, 21-karat to Dh187.50 and 18-karat to Dh160.75 in the UAE. Check the latest gold rates here.

Up until last week, prices had dropped over Dh10 during the course of 10 days. However, prices have steadily ticked up higher since.

Gold Price History
Gold rates in the UAE recorded during the past 10 days. Image Credit: Dubai Gold & Jewellery Group

Gold on verge of a big drop

After gold recorded its first weekly gain in six last week, prices remained under pressure and experts evaluate how it could be on the verge of a significant drop, with the upcoming US central bank meeting decisive for prices. 

The yellow metal's recent rally followed the US dollar's decline, which bolstered non-yielding bullion's safe-haven appeal as economic risks persisted.

Globally, the spot price of gold was at $1,726 per ounce. It was up about 1 per cent last week, following a strong rebound from a more than one-year low of $1,680.25 on Thursday. US gold futures - indicative of near-term price trends - were currently at $1,720.

Gold prices have dropped more than $350, or 16 per cent, since climbing past the $2,000-per-ounce level in early March due to the US' rapid rate hikes and the dollar's recent rally.

Gold, jewellery, gold ornaments
After gold recorded its first weekly gain in six last week, prices remained under pressure.

US meeting decisive for gold

Investors will closely watch the central bank meeting on July 26-27 in the world's largest economy, the US, for clues about its monetary policy path, and it's affect on gold prices. 

While the US central bank meeting is likely to be a high-volatility event for gold, there may not be many steep hikes after the one next week, analysts noted. Rising interest rates worldwide increase the opportunity cost of holding non-yielding bullion.

On Thursday, the European Central Bank raised its key interest rate by 50 basis points, the first increase in 11 years, as it confronts surging inflation. Gold climbed above $1,700 an ounce following this larger than expected rate hike.

"Assuming the US hikes by another 0.75 per cent in July, we believe the bulk of the near-term downside risk has been priced in; but the longer-term trend is still to the downside," Standard Chartered analyst Suki Cooper wrote in a note.