Time to buy? Gold prices are in recovery mode, say analysts
But if Fed signals imminent tapering in September, gold can fall back below $1,700.
Gold prices firmed on Wednesday, as escalating concerns over the economic fallout from the spread of the Covid Delta variant dented sentiment towards riskier assets, lifting bullion's appeal.
Spot gold rose 0.22 per cent to $1,790.03 per ounce by 9.15am UAE time.
In the UAE, 24K prices rose half a dirham to Dh216.75 at the opening of the market as compared to Tuesday prices. Among the other variants of the precious metal, 22K, 21K and 18K were trading at Dh203.5, Dh194.25 and Dh166.5 per gram, respectively.
Naeem Aslam, chief market analyst at London-based AVA Trade, said precious metal prices are in the recovery mode as prices have bounced off from their recent lows.
“The dollar index has lost its upward momentum and this has helped the gold prices to move higher. The fact is that traders have started to acknowledge now that the massive surge in inflation was nothing more than transitory, and the US Federal Reserve was completely right when they referred to the surge in inflation as transitory,” he said.
"The elephant in the room is this Delta variant and whether it does materially affect the global recovery. In that situation, gold is likely to find more haven buying," Jeffrey Halley, a senior market analyst, the Asia Pacific at Oanda, told Reuters.
"Gold's fate will be decided by the FOMC (Federal Open Market Committee) and whether they signal imminent tapering in September. If that leads to a higher dollar and US yields, gold is likely to fall back below $1,700," Halley added.
The dollar index held near recent peaks on other majors.
Fed chief Jerome Powell said it remains unclear whether the heightened outbreak of the Delta variant will have a noticeable impact on the economy.
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