Dubai: Gold rates recovered early on Tuesday from a sharp two-day sell-off that spooked global markets, after one of the most powerful rallies ever in precious metals.
On Tuesday, 24k gold in Dubai was costing Dh579 per gram at the morning trade, up from Dh564. 25 on Monday. 24k gold, meanwhile, gained to Dh536 from Dh522. 50, at least according to the local market data.
The recovery followed similar moves in global bullion markets, where gold and silver rebounded from sharp losses after a rapid unwinding of speculative positions last week caused heavy selling. Spot gold climbed up to 4.2 per cent to more than $4,855 an ounce, after a 4.8 per cent tumble in the previous session, as demand for safer assets picked up with growing market volatility. Silver also jumped as much as 8.1 per cent to break $85 an ounce after heavy losses in the previous day.
The recent gyrations come in the wake of a steep rally that pushed gold and silver to all-time highs in January, fuelled by geopolitical tensions and fears over governments debasing their currencies as well as speculation about the level of independence for the US Federal Reserve going forward. Chinese investors also intensified the rally with heavy buying.
That momentum was suddenly derailed on Friday as the US dollar rallied, prompting significant profit-taking. Gold dropped almost 13 percent in two sessions, the steepest short-term decline for the metal in more than a decade.
China: Market participants will now be looking towards China, and how demand develops there might influence short-term prices. Bullion markets in Shenzhen were said to have been teeming with buyers prior to the Lunar New Year, while domestic markets will be shut more than a week from Feb. 16.
Even amid the recent turbulence, some banks are bullish. Deutsche Bank restated its price prediction that gold will hit $6,000 an ounce on structural demand
