Dubai: How long can gold prices stay above $1,800?
Analysts project that the investors will need strong reasons to drive prices further up as better returns offered by equities also pose a challenge to the yellow metal
Gold price, which rose above $1,800 an ounce late on Monday, stayed above the psychological barrier on Tuesday as well.
Analysts project that the investors will need strong reasons to drive prices further up as better returns offered by equities also pose a challenge to the yellow metal.
Spot gold was up 0.14 per cent to $1,807.55 per ounce at 4.20pm UAE time on Tuesday.
In the UAE, 24K was trading at Dh218.25 per gram on Tuesday evening. Among the other variants of the precious metal, 22K was trading at Dh205.0, 21K at Dh195.75 and 18K at Dh167.75 per gram, according to the Dubai Gold and Jewellery Group.
“Gold’s positive correlation to equities is a sign that this is not a safe haven move, and the buy orders may not gain momentum above the $1,800 mark, as equities remain more appetizing and offer much better returns in an environment of softening Fed expectations,” said Ipek Ozkardeskaya, senior analyst at Swissquote.
Naeem Aslam, chief market analyst at AVA Trade, said gold prices rose above the crucial $1,800 level after an increase in coronavirus cases convinced investors that the US Federal Reserve might postpone the unstoppable tapering of stimulus.
“Moving onwards, traders would need strong reasons to drive prices further above the $1,800 level considering resistance levels near the 100 day and 200 day moving averages. Furthermore, investors should understand that if future economic data shows continued strength, hawks could be cornered to take control, leading to an eventual boost in interest rates, which would increase the opportunity cost of holding the yellow metal and drive its prices down,” said Aslam.
US investment bank Goldman Sachs said in a note that the precious metal price could go north due to a weaker US dollar.
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