Gold failed to retain the gains it made in its pre-Christmas mini rally, as the spot price of the precious metal dipped in thin trading ahead of the festive break.
The increase in the value of the US dollar and a third day of rallies on international stock markets saw investors shy away from sinking money into gold. Good economic news from the US, where new data showed a rise in personal income last month for the eighth consecutive month also helped to put pressure on the gold price.
Eli Tesfaye, senior market strategist for brokerage RJO Futures in Chicago, told Reuters: “The narrative here is that the positive economic reports are going to put pressure on gold.”
At 09:00 today (Thursday, 24 December), the gold price per troy ounce was £721.99, almost on a par with 24 hours earlier but down from its value of £725.74 at 17:00 on Tuesday (22 December).
Predictions for the New Year
The gold price is set to record its third successive year of falls in 2015 and is currently around 10 per cent lower than it was at the close of 2014. This has been a good year for private investors to get the most gold for their money, and if the price does continue to fall, there will be further bargains to be had.
Analysts expect the US Federal Reserve to continue its policy of increasing interest rates, but this is forecast to be gradual. A better performing economy, signified by a higher cost of borrowing and a strong dollar, traditionally sees gold prices fall. Gold prices generally increase during tougher economic periods as the metal is considered a safe haven for investors.
China, globally the biggest gold-buying country, may also ease back on its demand for the precious metal, according to Reuters, which said a number of analysts are “predicting that demand could fall for a third year in 2016”.
However, nothing is ever set in stone when it comes to the gold price. The spot price was widely expected to plummet after the Fed increased the cost of borrowing last week, and although there was a dip immediately after the announcement, the value of gold climbed at the end of last week, and into the start of this week.
It looks like being a case of keeping a close eye on the market and of course volatile world events, which can also send investors heading for the safety of gold.
Dubai introduces in-store gold price monitors
Dubai is aiming to boost its reputation as the ‘city of gold’ and give buyers greater confidence in the transparency of their transactions by introducing a centrally-controlled system showing the gold price in jewellery stores across the city.
Around 500 stores will be linked up to the Electronic Retail Jewellery Price Display Unit at the start of next year, with the system rolled out to 500 more in the coming months.
The programme is the result of a partnership between the Department of Economic Development (DED) and the Dubai Gold & Jewellery Group. It is part of efforts to show consumers and visitors to the city they will not be overcharged for their gold and jewellery purchases.
