Gold price slumps, how will it affect sales in Dubai?

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Gold price slumps, how will it affect sales in Dubai?

It slumped again after a 1-month high last Friday.

By Reuters

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Published: Sun 8 Jan 2017, 7:21 AM

Last updated: Sun 8 Jan 2017, 11:42 AM

Gold prices slipped on Friday from the previous day's one-month high as the dollar strengthened on a solid U.S. jobs report, while palladium was on track for its largest weekly gain since March on record high U.S. car sales.
Spot gold was down 0.7 percent at $1,171.70 (Dh4,303.60) an ounce by 2:51 p.m. EST (1951 GMT), but up 1.75 percent on the week, its biggest weekly rise in two months. Today's UAE gold price is only slightly higher to yesterday and early morning's rate of Dh4,323.26.

But with markets uncertain ahead of U.S. President-elect Donald Trump's inauguration on Jan. 20, investors turned cautious after gold reached its highest since Dec. 5 at $1,184.90 on Thursday. "Any profit that can be booked at this early stage is welcomed by most, so that's why we're seeing a scaling back a bit," said Saxo Bank analyst Ole Hansen.

U.S. gold futures settled down $7.9, or 0.67 percent, at $1,173.4 (Dh4,309.84) per ounce. Non-farm payroll data showed that the United States added fewer-than-expected jobs in December, though a rebound in wages pointed to further interest rate rises from the Fed. Higher interest rates exert downward pressure on the gold price by increasing the opportunity cost of holding non-yielding bullion.

Chicago Fed President Charles Evans said the central bank could raise rates three times this year if economic data comes in a bit stronger than he expects, while Richmond Fed President Jeffrey Lacker said it may have to raise interest rates quicker than markets currently predict. "For 2017, we think we are starting from a clean base, leaving room for seasonal drivers to breathe some life back into the yellow metal," said Christopher Louney, commodity strategist for RBC Capital Markets, in a note. "In fact, in our seasonality analysis we observe both the strongest and most consistent positive price performance during Q1 over the last 11 years."

Among other precious metals, palladium hit a five-week high of $757.70 an ounce before slipping back to $756.10, up 2.4 percent. The metal used in vehicle catalysts to clean exhaust emissions has risen 11 percent this week, its biggest gain since March, driven by high U.S. sales of new cars and trucks hit a record high in 2016.

Spot silver was down 0.7 percent at $16.46, while platinum was 0.7 percent lower at $961.35, though it was on track for a gain of 6.8 percent this week, its strongest since July.

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