Time to buy? Gold prices drop in Dubai ahead of Akshaya Tritiya
Gold prices dropped in Dubai on Monday morning after US President Donald Trump asked the American Navy to enforce a blockade of the Strait of Hormuz for Iranian ships.
The 24K gold price dropped Dh3.25 per gram to Dh569.0 per gram at market opening in Dubai on Monday. Similarly, 22K, 21K, 18K, and 14K slipped to Dh526.75, Dh505.0, Dh433.0, and Dh337.75 per gram, respectively.
The drop in prices brings good news for UAE shoppers who plan to buy gold jewellery this week ahead of the Akshaya Tritiya festival, which will be marked later this week.
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Jewellers in Dubai have reduced making charges and are also offering good discounts ahead of the festival.
Globally, spot gold was down 0.56 per cent at $4,721.94 per ounce. Silver was down nearly two per cent at $74.44 per ounce.
Alex Kuptsikevich, chief market analyst at FxPro, said the yellow metal has maintained a steady uptrend since the March 23 crash.
“However, the price spends a lot of time near the lower boundary of the channel and quickly rebounds from it. The price is currently near the lower boundary at around $4,750, while the upper boundary stands at $5,000—a level we expected to see a week earlier. From a technical analysis perspective, bulls are encouraged by the strong rebound from the 200-day moving average, which was touched at the end of March, after which the upward trend was established. Furthermore, the downward-sloping 50-day moving average is gradually lowering the threshold that buyers must clear to confirm a bullish trend,” he added.
However, a weakness lurks in the latter point. A fall of more than 20 per cent from the peak signals the start of a bear market, while the latest rebound merely indicates that not everyone has accepted this, with investors buying at the bottom. We last saw a similar sharp decline following a rally that touched the 200-day moving average, followed by a powerful rebound, back in 2011. Gold then rose above the 50-day moving average, recouping three-quarters of the decline, but left its highs untouched for the following nine years. Adjusting past movements to current figures suggests the potential for a rebound to around $5,200, where gold traded in the first days of March.
Kuptsikevich added that even these levels may prove out of reach for bulls, and the price rise may stall as it approaches $5,000, as the deteriorating macroeconomic outlook, inflation prospects, and central banks’ responses are fuelling selling interest among both retail investors and large fund managers.
