Gold hits $1,900, 24K crosses Dh230 mark in Dubai

Dubai - Analysts see a correction in gold price but low rates will continue to support the precious yellow metal.

Gold prices crossed a key psychological barrier of $1,900 an ounce globally, while 24K price in Dubai also hit the Dh230 per gram mark on Wednesday morning

Spot gold rose 0.46 per cent to $1,906.90 per ounce by 9.25am UAE time, its highest level since January 8.

In the UAE, Dubai Gold and Jewellery Group data showed the price of 24K jumping nearly three dirhams from Tuesday morning to reach Dh230.75 per gram at the opening of the trade on Wednesday.

Similarly, the other variants of the precious metals also gained on Wednesday morning with 22K trading at Dh216.75, 21K at Dh207.0, and 18K at Dh177.25 per gram.

Naeem Aslam, the chief market analyst at AVATrade, said investors are still massively favouring gold prices in the commodity space.

“We discussed previously that gold bulls are in control of the price. Today, we have seen the gold bulls trashing the $1,900 price level, and this pushed the gold price to a four-and-a-half month high. This is despite the fact that, on Tuesday, we saw some big improvement in the US Consumer Confidence level, and most of the economic readings have been encouraging this week,” said the London-based analyst.

Stephen Innes, the managing partner at SPI Asset Management, said the US Federal Reserve will maintain rates low. As a result, the US dollar is likely to remain weak and gold may perform well.

Is correction due in the gold price?

Aslam said traders continue to believe that inflation remains the single biggest threat, and there is no better hedge against inflation than gold.

However, AVATrade chief analyst sees some correction is on the horizon for the precious metal.

“It’s of significant importance to mention that gold prices are now overbought, and we could see some pullback soon. One of the catalysts that trigger a retracement in the gold price could be some sort of acknowledgement among the Fed members that they are close to debating the process of pulling back some of their coronavirus-related support. Any such comments could bring some strength to the dollar index, pushing the gold prices lower,” added Aslam.

waheedabbas@khaleejtimes.com

• Dubai