Gold posts 2% gain in one week; more increases expected

01/08/2016 05:38 AST

Retail gold prices have posted a one-week gain of 2 per cent or as much as Dh3.25 per gram and are forecast to increase further over the next few days.

Some industry analysts are now expecting the bullion to touch $1,400 level, following the recent statement and interest rate decision by the United States Federal Reserve and weaker-than-expected American gross domestic product (GDP).

As of Sunday 1.43pm, 24-karat gold in Dubai was retailing at Dh163.50 per gram, up by Dh3.25 from a week earlier. Other gold pieces including 22K, 21K and 18K traded higher at Dh153.75, Dh146.50 and Dh125.75 per gram.

In Asia trade, spot gold stood at $1,333.33 an ounce, easing by 0.1 per cent, at 0740 GMT on Friday, while US gold remained unchanged at $1,331.90, according to Reuters.

"As [the Federal Open Market Committee] decided to keep rates unchanged, gold reacted and moved higher. FOMC's no rate change decision is an indication that the Fed remains worried about the global economic outlook," Karim Merchant, managing director and CEO of Pure Gold Jewellers, said on Sunday.

"Fresh inventory and fund managers have started to eye gold and it seems gold is on an upward trend with a high possibility to touch $1,400 level," he added.

The latest Kitco survey also found that the majority (84 per cent) of analysts and traders in Wall Street are betting on the yellow metal to achieve more gains this week.

Industry experts turned bullish on gold after Friday’s GDP data confirmed that the United States grew less than expected during the last three months.

Another factor that could provide impetus for gold over the short term or next few months is the outcome of the presidential elections in the United States. A win by business tycoon Donald Trump is seen as a driver for investors to keep their money in safe-haven assets. The US dollar is going to be a key factor as well.

“As long as polls points to even the possibility of a Donal Trump presidency, global markets will remain in an unbearable wait mode. A Clinton presidency merely extends the status quo gridlock of the Obama presidency. But a Trump presidency? His volatile and controversial personality aside, Trump is something entirely new,” Raid Madiyeh, senior sales trader at Saxo Bank, told Gulf News.

Gulfnews