The price of gold is expected to continue its rally in the coming months due to geopolitical tensions in the Middle East and the anticipation of interest rate cuts by the US Federal Reserve. Analysts predict that the price of gold could reach Dh365 per gram in Dubai, making it a lucrative investment opportunity with prices expected to rise by about 25 per cent.
In the past 24 hours, the price of gold has already seen a significant increase of Dh6 per gram, attributed to the geopolitical tension and the recent assassination of the Hamas leader. Gold gained $40 in one session on Wednesday as the Federal Reserve adopted a more dovish stance and tensions in the Middle East escalated following the Israeli strike on Beirut.
Currently, the 24K variant of gold is trading at Dh296 per gram, while 22K, 21K, and 18K are selling for Dh274.0, Dh265.25, and Dh227.25 per gram, respectively. The global price of gold hit an all-time high in mid-July at $2,482, resulting in about Dh300 per gram in the UAE. Gold has shown an 18.55 per cent year-to-date increase, with analysts predicting a target range of $2,700-$3,000 in the upcoming months.
Vijay Valecha, the chief investment officer at Century Financial, believes that the current regional conflict could further support the price of gold. He also highlights the impact of potential rate cuts by the Federal Reserve, which would reduce the opportunity cost of holding gold and make it more attractive to investors. Valecha forecasts a promising trajectory for gold, with a potential target range of Dh330-Dh365 in the near future.
Ole Hansen, the head of commodities strategy at Saxo Bank, shares a similar sentiment, stating that gold prices could cross Dh300 per gram again in the coming sessions. Factors such as strong demand from family offices, rich individuals, and central banks, along with geopolitical risks and continued central bank purchases, provide solid support for gold prices. Hansen emphasizes the importance of the US rate-cutting cycle and a relatively weak dollar in pushing gold prices higher.
Hansen also mentions several key factors that will influence and lift gold prices in the coming weeks, including expectations around the Federal Reserve’s rate cuts, ongoing geopolitical tensions, central bank purchases, retail demand in China, and a revival in Western ETF investment flows. With these factors in play, gold prices are expected to remain strong, potentially surpassing Saxo Bank’s year-end target of $2,500.
In conclusion, the current geopolitical tensions in the Middle East, along with the anticipated interest rate cuts by the Federal Reserve, are expected to drive the price of gold higher in the coming months. Analysts predict a significant increase in gold prices, making it an attractive investment opportunity for investors. Factors such as strong demand, geopolitical risks, and ongoing central bank purchases will continue to support gold prices, leading to a bullish outlook for the precious metal. Stay updated on the latest developments in the gold market to make informed investment decisions.
