Precious metal could touch $1,700 an ounce if it falls below $1,760, say analysts

Gold prices could fall to $1,700 an ounce if it drops below the key support level of $1,760, while 24K price in Dubai may slip below Dh210 per gram this week as traders believe that the US Federal Reserve will not maintain its current monetary stance, say, commodity analysts.

The yellow metal has gone from threatening to break above the $1,830-35 resistance zone to tumbling through the key support of $1,790 to end the week at $1763,69. Last week, the US manufacturing sector’s performance, hawkish comments from the Federal Reserve’s Richard Clarida and a knockout jobs report led to a sharp sell-off in the precious metal.

In the UAE, 24K closed last week at Dh213.5 per gram. While 22K, 21K and 18K were trading at Dh200.5, Dh191.5 and Dh164.0 per gram, respectively.

“Surprisingly positive non-farm payroll (NFP) report with the addition of 943,000 positions in July versus expectations of 870,000 has market participants believing that the Federal Reserve may have to tighten monetary policy much sooner than anticipated. This was reflected in the rebound in dollar and Treasury yields which is negative for the non-yielding bullion,” says Vijay Valecha, chief investment officer at Century Financial.

Although the metal is seen as a hedge against inflation, a bullish number would further strengthen fears of an earlier taper and weigh on gold, he said.

“The metal is trading near the crucial trendline support of $1,760, a break below which will open doors to $1,735 and $1,700 level. On the upside, the metal will encounter strong resistance near previous support of $1,790,” said Valecha. In the UAE markets, 24K gold price is expected to trade in the range of Dh206 and Dh218.

Naeem Aslam, chief market analyst at AVA Trade, said the US non-farm payroll (NFP) numbers pushed the gold price sharply lower as traders believe that the Federal Reserve will not maintain its current monetary stance; hence, the change is coming.

Waheed Abbas

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