Retail gold prices drop as much as Dh11.75 in one month
Dubai-UAE (Nov 2) Gold’s retail price in Dubai has dropped by more than Dh11 per gram in just about one month, thanks to rising expectations that the Federal Reserve in the United States would adjust interest rates in December.
As of Sunday noon, 24-carat gold was retailing at Dh129.75, down Dh11.75 compared to last October 21’s prevailing price. The selling rate for 22K stood at Dh123, while 21K and 18K traded at Dh117.50 and Dh100.75, respectively. In the global market, spot gold dropped 0.5 per cent at $1,076.40 an ounce at 2.38pm EST on Friday.
The majority of retail investors are also expecting the bullion to trade lower this week. According to Kitco’s Weekly Gold Survey, most respondents (56 per cent) said they are bearish on gold’s price for this week. Only about a third (34 per cent) forecast higher prices, while 10 per cent are neutral.
Gold’s weakness has been attributed to rising expectations for the Fed to increase rates during its upcoming meeting next month. Expectations were fueled by recent data that suggested that the economy in the United States is doing well, given that the number of jobs it created last month exceeded earlier economist forecasts.
In a separate analysis by ABN Amro, it was noted that the global price of gold has actually dropped between 9 and 20 per cent since the Fed met last October 28.
“This is substantial. The increasing expectation a Fed rate increase at the 16 December meeting has pushed precious metal prices lower and the US dollar higher,” wrote Georgette Boele, coordinator for foreign exchange and precious metal strategy at the Dutch bank.
If the Federal Reserve decides to jack up the rates, it will be the first increase since 2006.