UAE: Analysts bullish on gold, seeing touching $1,800 this week

Dubai - Strong China buying could help keep gold prices buoyant in the near term

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By Wahed Abbas

Published: Sun 2 May 2021, 8:39 AM

Last updated: Sun 2 May 2021, 8:40 AM

Analysts are bullish about the gold prices this week due to China’s buying prowess and reduced upward pressure on US Treasury yields.

Vijay Valecha, chief investment officer, Century Financial, said the rise in US Treasury yields is unlikely to be sustained as Jerome Powell, the chairperson of the US Federal Reserve, is not even discussing the tapering of bond purchases.

“On the US stimulus front, the proposed infrastructure spending package faces opposition as Senator Joe Manchin, a key Democrat, only supports passing a bill with Republican support. This political gridlock should reduce the fiscal stimulus size and reduce the upward pressure on yields and thus bullish for gold,” said Valecha.

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The sharp rise in the 10-year US Treasury yields from the previous week's closing of 1.529 per cent to 1.686 per cent on Thursday pressured precious metal prices last week. On Friday, Treasuries closed at 1.625 per cent.

While spot gold prices last closed at $1,768.91 an ounce, down $2.33 or 0.13 per cent on Friday.

“In international markets, spot gold has strong support near $1,760 and is likely to test $1,800 again,” he added.

In Dubai, 24K gold closed at Dh214.25 per gram while 22K, 21K, and 18K were priced at Dh201.25, Dh192.0, and Dh164.75 per gram, respectively, on Friday.

Valecha sees 24K has support near Dh213 per gram and could touch Dh219 this week.

Besides, China is the world's biggest gold consumer, gobbling up hundreds of tonnes of precious metal worth tens of billions of dollars each year.

Reuters reported that about 150 tonnes of gold worth $8.5 billion (b) is likely to be shipped following the green light from Beijing. Two said the gold would be shipped in April and two said it would arrive over April and May.

This will also help keep the precious yellow metal prices buoyant in the near term.

--- waheedabbas@khaleejtimes.com

Wahed Abbas

Published: Sun 2 May 2021, 8:39 AM

Last updated: Sun 2 May 2021, 8:40 AM

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