Analysts are bullish about gold prices this week, expecting US President Joe Biden to propose raising capital gain tax in the world’s largest economy which will give fillip to the precious metal.
In Dubai, it is expected that the yellow metal could gain as much as Dh5 per gram this week. On Friday, 24K retail price in Dubai stood at Dh215.25 per gram, 22K at Dh202.25, 21K at Dh193.0, and 18K at Dh165.25, according to Dubai Gold and Jewellery Group data.
Globally, the precious metal closed at $1,777.11 an ounce, down $16.72 an ounce or 0.93 per cent, giving up some initial gains that were driven by a weaker dollar and subdued US yields.
“Gold has been bullish all of last week on the basis that US President Biden will propose hiking the capital gains tax rate from 20 per cent to 39.6 per cent. From a yield perspective, if the administration does manage to raise tax revenues, that could lift Treasuries since it will help cap long-term yields in the months ahead. This would be bearish for US dollar and bullish for gold from a macro-perspective,” said Arun Leslie John, chief market analyst at Century Financial.
“In the UAE, 24K gold price is likely to trade in the range of Dh212 to Dh220 per gram for the week,” said John.
Michael Matousek, chief trader at US Global Investors, said although prices closed lower on Friday, underlying factors such as safe-haven inflows due to the pandemic, the likelihood of rising inflation, lower interest rates for longer and supportive technicals make the case for holding gold.
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