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29 March 2024

Gold lacks lustre at 4-month low

Published
By Vicky Kapur

Spot gold prices plunged to a four-month low today, slumping to $1,583 per ounce as economic ramifications of Greece’s political turmoil made investors lose confidence inthe ‘safe haven’ status of the yellow metal.

Spot gold is down by more than 1.25 per cent in early trade, continuing from yesterday’s slide of 2 per cent, and was trading at $1,583.93/oz at 1pm UAE time (9am GMT).

Prospects for the gold bull look bleak as the metal fell through its $1,620/oz support level yesterday, and then the psychological barrier of $1,600/oz this morning.

Analysts now believe the precious metal could be supported at the $1,580/oz level, but a number of experts now don’t rule out the metal plunging back to $1,500/oz levels if it keeps sinking on the back of a strengthening dollar, a weaker euro and political instability in Greece and France.

According to Jordan Kotick, Global Head of Technical Strategy at Barclays Capital, gold prices hitting $1,500/oz is a possibility in the short term.

“It’s been going sideways since September 2011. Usually,when you fail at the top of the range, $1,800, you come down and kiss the bottom,” he said. “So the bottom end of the range is the mid- to low-$1,500 handle,” Kotick has been quoted as saying by Moneycontrol.com.

Standard Chartered, on the other hand, remains hopeful of a near-term rebound in gold prices. “Gold investors are in two minds about the near-term price outlook,” it said in its Metals Insight report yesterday.

“We expect near-term prices to be determined by technical factors. The latter shows support at $1,612/oz and we expect gold to rebound around this level,” the report added.

According to StanChart, China’s continuous buying of gold offers respite to gold investors. “The latest data for China’s gold imports from Hong Kong shows still-strong demand. According to the Hong Kong government’sCensus and Statistics Department, the mainland imported 62.9 tonnes of gold in March, up 59 per cent from February,” the report said.

“This is nearly six times higher than a year ago and the highest level in four months, as well as the third-highest level in history.While it is difficult to clarify whether China’s central bank is behind this, we believe China’s jewellery demand remains very strong,” it added.