Dubai gold rates still dropping

Dubai- The price of gold continues to drop as the United States Federal Reserve talks draw closer.

Over the course of this month, gold prices have dropped drastically. . As of Sunday, 12:30pm, 24 karat (24K was retailing at Dh158.75 per gram, down by Dh1.75 from Wednesday’s closing rate.

Experts are predicting that the precious metal’s strength will remain in place. However, expectations of another interest rate increase is fueling some short-term uncertainty.

“The rally in gold is running out of steam as Fed rate hike expectations have resurfaced. We now expect a period of consolidation as long as Fed rate hikes for 2016 and 2017 are not fully priced in,” ABN  Amro said in its latest monthly analysis.

“We hold on to our view that the uptrend in gold remains in place because of US economic growth will likely be below inflation… However, the prospect of Fed rate hikes will weigh on gold.

According to the latest survey conducted by Kitco, it was discovered that experts in Wall Street have different opinions on their view about gold’s direction this week, with 38 per cent banking on the precious metal to trade higher, while 31 per cent are bearish.

“The market has maintained a lingering worry that Janet Yellen (Fed’s chair) and her fellow members of the FO may opt to strike,” Ole Hansen, head of commodity strategy at Saxo Bank, said in its note on Sunday.

“Several hawkish, but also one dovish, comments from Federal Reserve officials over the past week has left some members boxed in with another ‘no change’ outcome potentially raising some credibility issues.