Gold jewelry prices in Dubai spiked Monday, as the USD fell in the aftermath of the recent Fed dovish interest rate adjustment.
Bullion retailed Monday by as much as Dh10/gram when compared to the prices in the beginning of the year, with the 24K selling at Dh149.50/gram, down from Dh139.50 in January.
Also, Spot rose to its highest in two weeks at 1,234.60 before settling at 1,233.60 by 0310 GMT.
Some analysts expect that the precious Yellow metal will continue to be supported, with the spot price forecast to range between 1,228 – 1,247 oz.
Others are forecasting the price to range between 1,175 – 1,375 this year.
Gold’s strong showing is partly a result of the continued decline in the Buck, which touched a 5-week low after the Fed raised interest rates last week for the 3rd time since June 2006.
“Gold is testing higher ground due to dovish tone from Fed on interest rate increase for the rest of the year, coupled with short-term covering speculations. I strongly feel gold price will take its direction based on Fed interest rate policy,” managing director of Pure Gold Jewellers said in a media statement.
“The market had feared a much more hawkish tone from Fed chief Janet Yellen after strong recent economic data. The dovish rate hike, as it turned out to be, triggered short-covering and gold returned to relative safety above 1,221 an ounce,” said Ole Hansen of Saxo Bank.
Although the Dutch election is over, there are still geopolitical risks in the EU and the attention is now focused on the French presidential polls. The latest trend suggests that French far-right candidate Marine Le Pen is ahead of over centrist Emmanuel Macron.
That kind of news will add some support to Sold, not least when priced in Euros.
Gold survived another FOMC rate hike and some stiff headwinds during the past few weeks, so Shayne and I sense that underlying demand, will keep the market supported across the board.