Dubai gold prices rise ahead of Diwali

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Dubai gold prices rise ahead of Diwali

Dubai - US gold futures were down 0.2 percent at $1,234.7 an ounce.

By Reuters

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Published: Wed 24 Oct 2018, 8:39 AM

Last updated: Wed 24 Oct 2018, 2:25 PM

Gold prices nudged higher on Wednesday after hitting their highest in over three months in the previous session as global political and economic uncertainties bolstered safe-haven demand for the metal.
Spot gold was up 0.1 percent at $1,231.81 an ounce at 0420 GMT. On Tuesday, it touched its highest since July 17 at $1,239.68.
In Dubai, 22k can be bought at Dh140.50 and buyers can get 24k at Dh149.50
US gold futures were down 0.2 percent at $1,234.7 an ounce.
Palladium was down 0.1 percent at $1,139.50 per ounce after hitting an all-time high of $1,150.50 in the previous session.
"Gold has benefited from general equity weakness, short covering, and rising risk aversion ... There is potential for further upside amid rising risk aversion and geopolitical risk," said John Sharma, an economist with National Australia Bank (NAB) 
Global stocks have suffered this week on worries about US earnings, Italian government finances, trade tensions and mounting pressure on Saudi Arabia over the death of dissident journalist Jamal Khashoggi.
"Weakness in US equities will neutralize the haven appeal for US dollar, playing into gold's hands," said Stephen Innes, APAC trading head at OANDA in Singapore.
"Risk aversion is in play. The difference this time around is the US dollar does not have a go-to haven appeal it had from escalating trade war tension."
Dollar denominated gold is used as an alternative investment during times of political and financial uncertainty.
While the dollar is also considered a safe haven currency, weakness in US equities has tended to undercut its appeal especially as talk of a peak in US corporate earnings has raised concerns about the outlook for economic growth.
The bullion has slipped nearly 10 percent from its April peak after investors preferred the dollar as the US-China trade war unfolded against a background of higher US interest rates.
Meanwhile, Atlanta Federal Reserve President Raphael Bostic said on Tuesday that falling stock prices, uncertainty around global trade and other possible "headwinds" are not enough yet to throw the US economy off course or force the Fed to alter its intent for continued gradual rate increases. 
"At this stage, the Fed will be monitoring factors such as the US labour market and inflationary pressures. However, stock market weakness and possible yield curve inversion might induce some caution," NAB's Sharma said.
Spot gold may retest a resistance at $1,238 per ounce, a break above which could lead to a gain into the range of $1,252-$1,263, according to Reuters technical analyst Wang Tao.
According to Amit Kumar Gupta, portfolio management services head at Adroit Financial Services in New Delhi, "gold will continue to find support in $1,210-$1,215 region, the previous breakout level. On upside, $1,245-$1,252 can be achieved in next couple of weeks amid U.S mid-term elections uncertainty." 
Silver rose 0.3 percent to $14.77 per ounce, while platinum was down 0.3 percent at $828.24.
 


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