Gold will remain under pressure on strong dollar, global slowdown

The US dollar and Britain’s exit from the European Union could also trigger a shift in the gold price

Anil Dhanak,

Managing director, Kanz Jewels

The analysts had expected Fed’s dovish stance would lift the gold prices but the rise short-lived due to the fears of the global economic slowdown. However, positive economic data from the US and China as well as a successful trade deal between both economic super power could lift the gold prices.

Gold prices dropped to a threeweek low on Tuesday to $1,284.76 (Dh4,715) as improved risk appetite in global stock markets resulted in less demand for safe-haven assets. But it recovered on Wednesday and was trading at $1,293.9 (Dh4,748) an ounce, up by 0.9 per cent year to date. The price is down by 3.7 per cent since April 3, 2018. It reached the lowest level of $1,175.29 (Dh4,313) per ounce on August 15, 2018.

Shamlal Ahamed, managing director for international operations at Malabar Gold and Diamonds, said the dip in price is an opportunity for the customers to buy gold and jewellery on lower rates.

“The gold prices are expected to remain favourable for the customers. The upcoming festive season and related festive offers will give ample reasons for customers to buy gold jewellery,” said Ahamed.

Anil Dhanak, managing director, Kanz Jewels, expected the price of gold would remain steady as there is a positive sentiment with the US and Chinese economies.

“The US dollar and Britain’s exit from the European Union could also trigger a shift in the gold price,” added Dhanak.

Naeem Aslam noted that the factors that will influence the yellowmetals in the second quarter this year will be geopolitical uncertainty, US-China trade war nearing its end, Chinese economy data and upcoming earnings seasons.

Jameel Ahmad, global head of currency strategy and market research at FXTM, said that due to global uncertainty, investors are very much taking matters day-to-day.

“Brexit, trade tensions, slowing growth and geopolitical tensions are just a few of the uncertainties that the world economy is still facing. “Whether the US dollar weakens or gets stronger will be the main influential factor on gold price. Whether there is a resolution to the ongoing trade tensions between the US and China is another main factor. If there isn’t a resolution, or the negotiations break down, then this will likely to promote market uncertainty that can potentially encourage buying interest back into gold,” said Ahmad.