Dubai: The precious metal has broken the closely watched $1,200 support level, as it plunged to its lowest in nine months on Wednesday.
Gold’s series of declines following the election of Donald Trump in the US has also resulted in an uptick in physical buying at jewellery stores in Dubai.
As of 8:28pm, 24K was retailing in Dubai at Dh143.50 per gram, down by a whopping Dh14.50 since its peak in the wake of Trump’s victory (November 7).
Spot gold slumped to $1,181.45 per ounce on the same day, the lowest since February 10, according to Reuters.The bullion had earlier dropped to a five-month low, just a few days after Trump won.
Analysts are betting on this trend to continue on heightened interest rate increase expectations.
Some jewellery shops reported that gold fans in Dubai have been taking advantage of the low prices by stocking up on light-weight ornaments, as well as gold bars and coins.
“The trend is directly related to the fall in gold price and opportunistic buying. [It’s] mostly light-weight Indian jewellery, along with gold bars and coins, [that have been selling out fast],” said Karim Merchant, managing director of Pure Gold Jewellers.
“If gold prices fall further, I expect a huge increase in gold sales. It seems like change to interest rate is imminent and if the rates continue to increase, gold prices will fall further. Gold price and interest rates have had an inversely proportional relationship.”
About a week earlier, the US dollar index rose to a thirteen-year high, causing gold prices to fall significantly. The previous week also witnessed heavy selling in physically backed products.