Gold price rises to $1,117.80 an ounce
Analysts attribute increase to Chinese yuan devaluation
The global prices of gold moved higher on Monday, causing retail prices in the UAE to edge slightly higher by less than a dirham per gram.
Retail gold rate in Dubai went up from Dh134.75 per gram for 24K on August 17, while the price for 22K edged higher from Dh128.25 to Dh128.50. Retail prices for 21K and 18K gold remained unchanged at Dh123 and Dh106.50 per gram, respectively.
In the global market, spot gold increased 0.4 per cent at $1,117.80 an ounce. The price of gold dropped to its lowest level in five years in July, at $1,088.050 an ounce, but it later rebounded to $1,121.40 last week.
Analysts have attributed the recent price movement to the devaluation of China’s currency, which is making it unlikely for the Federal Reserve to increase interest rates. Low interest rates are likely to keep gold prices rising.
However, Karim Merchant, Group CEO and managing director of Pure Gold Jewellers, said that the recent adjustment in bullion prices is only short term, adding that there’s a possibility of further reductions.
Merchant said he expects the price of gold to stay around $900 to $1,100 an ounce this year. “The recent price increase is just a speculative shor-term movement of gold trading.”
Shailesh Dash, CEO of Al Masah Capital, said that despite the recent uptick in gold purchases, triggered mainly by bargain hunting, gold traders are still in control.
“Some investors may be speculating that a short-term bottom has been reached. However, factors that caused the drop in July still remain – China reduced its gold holdings and commodity markets in general witnessed steep selloffs due to fears of a Chiense slowdown,” Dash told Gulf News.
“For this buying to justify a true bottom and signify a breaking of the current trend, gold will need to maintain these buying levels on high volume.”
Rolf Schneebeli, CEO of Gold Services AG, a gold and investments advisory firm in Dubai, described the recent movement as a mere “technical correction.”
“It’s demonstrating that the level of $1,080 to $1,100 is holding on the downside and that the bearish speculators cannot bring it below that level.”
“In general, you can see that the stock markets are stabilising as well. The feeling is that the Chinese government has their domestic economic situation under control and that there won’t be any global crisis arising out of that.”