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Dubai: Gold prices likely to remain under pressure

Dubai - 24K likely to trade between Dh217 and Dh223.40 per gram this week in UAE

Gold price is likely to remain under pressure as investors continue to exit gold ETFs and tight global supply chain conditions ease which reduce the metal’s safe-haven appeal, analysts said.

Last week, gold rose to $1,800, but a confluence of 100 and 200-day moving average at that level acted as a strong resistance. The decline in yellow metal came about as the risk sentiments improved following a decrease in the producer price index (PPI), which eased inflation fears.

The precious metal closed the week at $1,767.63 per ounce, down 1.52 per cent. In the UAE, 24K was trading at Dh214.0 per gram, 22K at Dh201.0, 21K at Dh191.75 and 18K at Dh164.5 on Sunday morning.

“There are also expectations that supply-side bottlenecks will ease following the decision of some US ports to work 24 hours a day for three months. Vietnam, a key cog in the global supply chain, is also normalising. Automobile major Toyota has ramped up production, and Hyundai's US chief has stated that the worst of chip shortage is behind us. This suggests that tight supply chain conditions are easing and removed the fear of stagflation in the market, which reduced the metal's safe-haven appeal,” said Vijay Valecha, chief investment officer at Century Financial.

On the investor front, he said they continue to exit from gold exchange-traded funds(ETFs).

“The short-term trend of gold is towards the lower side as it has also broken below the 50-day moving average, and it could target $1,750 in the near term. Resistance is near $1,775 and $1,800. This week, 24K gold rate is likely to trade between Dh217 and Dh223.40 per gram in the UAE,” he added.

Thomas Westwater, an analyst at DailyFX, said high-impact economic events will likely be key to the outlook.

“With that in mind, this week will bring Chinese third-quarter GDP, with analysts expecting a 5.2 per cent figure to cross the wires, according to a Bloomberg survey. A better-than-expected print may reinvigorate bullish bets over the global economic recovery. That could drag gold prices lower,” he added.

-waheedabbas@khaleejtimes.com