Gold prices in the UAE could surpass Dh310 per gram in the near future if the geopolitical volatility worsens and uncertainty continues around the US Federal Reserve decision about the interest rate cuts, analysts said.
Going forward, investors have been advised to take a cautious approach after yellow metal hit nearly a record high recently.
In the UAE, the 24K variant of the yellow metal was trading at Dh292.75 per gram, while 22K, 21K and 18K were trading at Dh271.25, Dh262.5 and Dh225.0 per gram, respectively, on Tuesday evening.
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Spot gold was trading at $2,428.05 per ounce, up slightly on Tuesday afternoon. Prices touched nearly $2,450 in the previous session.
According to Shadi Mashkok, CEO of Grand Capital, Fibonacci says that once yellow metal reaches $2,433 per ounce, its next level will be $2,500. “After that, my estimate is that gold will reach $2,950 as people are tired of economic problems in the world and they are looking for safe assets like gold,” he said.
This means the 24K variant of the yellow metal could cross Dh310 per ounce in the near future due to excessive geopolitical volatility.
Mashkok added that BRICS nations could have a new currency, so many investors will shift their assets to this new currency from the US dollar, hence, this will result in the weakness of the greenback and strengthening of the gold.
Shadi Salloum, regional director for Mena at XS.com, said since the beginning of this year, the market has been driven by two main asset classes – gold and bitcoin.
“We have seen gold rise sharply from $2,200 to $2,450, driven by demand and buying from central banks. The second factor is geopolitical tension that has not yet eased. The gold is moving in side range, but we hope there will be a clear direction in the next couple of days in the wake of the Iranian helicopter crash and Fed interest rates,” he said.
Salloum expects gold to trade in the range of $2,391 to $2,450 over the next couple of weeks.
He predicted that in case unusual events unfold in terms of geopolitical tension or unpredicted move from the US Federal Reserve, the yellow metal could reach $3,000 also.
He advised investors “to go slow with the market, don’t go sharply with some very big positions. The nature of the gold is very sensitive so try to be cautious about trading and take it slowly and you will be stable in trading.”
He alerted that investors tend to be scalping more towards the gold, “going big on positions when it is low to capitalise on sharp movements, which is a double-edged sword. There is excessive leverage to make extra profits, which is not a correct approach due to what is going on in the world.”
Swiss bank Julius Baer said that prior to 2022, western investors were almost always the marginal buyers.
“Since then, demand from Chinese investors, and above all the People’s Bank of China, has picked up. Their willingness to pay also seems much higher than that of western investors, who are finding more attractively priced safe-haven alternatives in high-grade bonds. Plus, the central banks’ motivation is much more political than economic, which is lifting their willingness to pay,” said the Swiss bank.