Stock Gold souq Deira
Shoppers and tourists at Dubai Gold souq in Deira. Image Credit: Ahmed Ramzan/Gulf News

Dubai: With the Eid shopping season underway, prospective UAE-based gold buyers are setting their hopes on prices of the yellow metal dropping below Dh210, and analysts flag a favourable rate awaiting them in the days to come.

In the UAE, the cost of 24-karat gold was at Dh229.75 per gram on Saturday, down from Dh231.50 on Friday. Check the latest gold rates here. Meanwhile, the price of 22-karat gold fell to Dh215.75 per gram, 21-karat to Dh206 and 18-karat to Dh176.50 in the UAE.

Gold rates globally have off late been hovering at around $1,900 after spending the most part of April raring to rush past $2,000 for a second straight month. However, gold prices could slip to $1,860-$1,870 an ounce from the current levels, analysts flag.

"Gold market has seen consistent sell-off in the past weeks as the US dollar rallied. Currently, the dollar has declined, which is lifting gold prices," said Edward Meir, an analyst with ED&F Man Capital Markets.

Technical analysts are evaluating how a resurgence in selling (on the market, which pushes down prices) could see it retesting the daily lows of $1,888 to $1,891 range, below which the April 27 low of $1,879.50 will be targeted next. Additionally, Thursday’s low of 1,871 will be the level to beat after that, they add.

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Gold is proving remarkably resilient, gaining almost 7 per cent this year as demand for the haven asset remains strong.

Weaker dollar to limit gold gains

Moreover, since the majority of gold traders are biased to an upward price trend, this suggests that prices may continue falling. However, in the unlikely event of prices rising, analysts expect costs to rise to between $1,908 and $1,918 with the $1,923.70 level serving as an upper limit.

The dollar fell marginally after touching a 20-year high on Thursday, making gold less expensive for those holding other currencies. A weaker dollar makes gold more attractive for other currency holders, while higher interest rates increase the opportunity cost of holding bullion, which is also used as a hedge against inflationary pressures.

Gold is proving remarkably resilient, gaining almost 7 per cent this year as demand for the haven asset remains strong. That's because gold buyers are taking a pessimistic view of the global economy's ability to cool decades-high inflation without hurting the economy.

Gold prices had regained balance in the previous sessions as investors sought cover from fears of stalling global economic growth and soaring inflation. The Russia-Ukraine crisis weighed heavily on the global economy and reinvigorated investor interest for gold, pushing the price briefly to $2,070 per ounce in March, just shy of its all-time high.

Turning to the jewellery sector, global gold demand soared 34 per cent during the January-March quarter, the World Gold Council reported on Thursday, reaffirming the metal’s status as a safe-haven investment during times of geopolitical uncertainty.