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Commodity analysts said that as the Fed intends to complete the reduction process before the middle of next year, this will help the US dollar remain strong, and the price of gold will remain below US$1,800 per ounce in the short term.
In the UAE, the price of 24K this week may be lower than 220 dirhams per gram.
According to data from the Dubai Gold and Jewelry Group, the trading price of 24K on Sunday is 213.25 dirhams per gram. Among other variants of precious metals, 22K is traded at AED 200.50, 21K is traded at AED 191.25, and 18K is traded at AED 164.0.
Due to the lack of good news in the US employment report on Thursday, which led to the fall in US Treasury yields and the US dollar, the price of gold rebounded from a low of US$1,722 to close at around US$1,761 this week.
Naeem Aslam, chief market analyst at AVA Trade, said that the number of initial jobless claims in the United States last week was lower than expected. As a result, the U.S. dollar index fell and the price of gold rose nearly 2%.
“However, investors should keep in mind that the expectation that the Fed will soon begin to reduce quantitative easing is becoming an obstacle to any form of upward movement in the precious metals,” Aslam said.
Vijay Valecha, Chief Investment Officer of Century Financial, said that this short rebound did not make much sense. At best, it seemed to be a correction to the downward trend or short covering.
At the same time, strong US manufacturing purchasing managers’ index data and core PCE index data also stagnated the momentum of precious metals near $1,760.
“As the Fed plans to complete the reduction process in mid-2022 and subsequently raise interest rates, U.S. Treasury yields and the U.S. dollar should remain strong, which will continue to cast a shadow on the gold outlook,” Valecha said.
“From the beginning of September, gold has created a series of lower highs on the chart. In order to show some momentum, it must capture previous highs that have not been reached so far. From this perspective, $1,787 is a key Horizontal. In the UAE, the 24K support is at 208 dirhams per gram and the resistance is at 218 dirhams,” he added.
-waheedabbas@khaleejtimes.com
Wahid Abbas
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