If the year 2015 was one of struggle for the precious metal gold, chances are that the situation will ease out in 2016. Last year, gold prices took a beating from widespread speculation that the United States Federal Reserve would adjust the interest rates. As such, the beginning of 2016 saw a rather gloomy forecast. However, there has been a quick change in the scenario with gold prices rising by about 19 per cent in less than three months. A recent analysis of ABN Amro suggests that the precious metal should average USD 1,214 per ounce in 2016, up from the earlier forecast of USD 995.
However, chances of any further rise have been negated by most gold merchants and market analysts. In fact, it is believed that in 2016, every dip in gold prices will be an opportunity for consumers with a long-term view to make an additional investment. The existing price level may drive the demand for jewellery, especially during festive occasions. In particular, it may lead to more jewellery buying by Indians settled in the UAE on occasions such as the festival of Diwali during October-November 2016.
The gold prices have been hitting their lowest level after reaching a peak in 2011. Gold merchants in Dubai feel that the prices may gather momentum in the fourth quarter of 2016 as part of an accelerated economic global growth in India, US and Europe. For now, jewellery buyers and investors are expected to enjoy low gold prices as the precious metal will remain under pressure due to a strong US dollar.
While the general opinion is that the price will stabilize at around USD 1,000 per ounce, there are opinions from some quarters that it could hit a bottom of USD 800 at the end of the year. Meanwhile, the gold market has dramatically changed and the metal is not only bought with the objective of providing protection during uncertain times but also for speculation. Over the last one week, 24-carat gold in Dubai was retailing at Dh 139 per gram, up from Dh 137 a week ago. The price for 22-carat gold was pegged at Dh 132, while 21-carat and 18-carat stood at Dh 126.50 and Dh 109.50 per gram respectively.