Gold price to test $1,100 level this week 

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Gold’s retail prices in Dubai have dropped by nearly Dh2 per gram in one week

The gold price could spike down again to test the $1,100 level this week while investors await the next US Federal Reserve’s main policy rate, an analyst said.

The bullion’s retail rates in Dubai have dropped by nearly Dh2 per gram in the course of seven days, with the global prices dropping almost two per cent and hitting $1,098.35 an ounce last week.

The price for 25-carat gold stood at Dh134.25 per gram on Sunday, down Dh1.75 from a week ago. For 22-carat, the price was pegged at Dh127.75, down Dh1.50 from the same period last week. The price for 21K stood ad Dh122.50, while 18K was trading at Dh106 per gram.

Spot gold was trading at $1,104.50 on Friday compared to $1,122.80 a week earlier. If the precious metal cracks below the key $1,100 level this week, gold fans in Dubai are in for some bargains.

Rolf Schneebeli, CEO of Gold Services AG, said that the interest rate increase in the US is now more likely to happen “after some good economic figures” were released recently.

“For the coming days, I would see a testing of the $1,100 level but would think that it will hold. Any drop below [that] is a good opportunity to buy with a short-term view,” Schneebeli told Gulf News.

Christopher Dembik, economist at Saxo Bank, said that the probability of a rate hike this month is “stronger than generally believed.” “There is no perfect timing to tighten monetary policy but several arguments confirm that the Fed is able to begin this month if wanted.”

Among the key reasons why the Fed should implement a rate increase this month, Dembik said, is that the unemployment levels in the US are now low at 5.1 per cent, and the country “enters its seventh year of expansion”.

“The current period of growth is already 16 months longer than the average period of growth since 1945. Likewise, as for inflation, the Fed has nearly achieved its goal as inflation excluding oil and energy lies at 1.8 per cent, close to the 2% target.”

“Taking into account the evolution of the barrel, inflation is down significantly, but this near-deflation situation is an external factor on which the central bank has little influence and can not be the only driver of the American monetary policy strategy.”

Source: GulfNews – Gold price to test $1,100 level this week

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