Gold has continued to gain support from Britain’s decision to leave the European Union, with the precious metal in Dubai currently trading at nearly 2 per cent higher than a week ago.
The majority of Investors and other experts in the market expect the bullion’s prices to climb higher this week, as shockwaves from the Brexit vote have yet to settle down completely.
In the latest Kitco gold survey among analysts, traders and market professionals, about seven in ten (73 per cent) of the respondents from Wall Street, as well as 65 per cent from the “main street”, are bullish about gold’s performance this week.
Market professionals are almost unanimous in saying that there is still anxiety among investors and many are keeping a close watch on what steps the central banks will take next.
As of 10.30am in Dubai, the price for 24-karat gold stood at Dh162.50 per gram, higher by Dh3 from a week earlier. Other gold pieces are also trading higher, with 22K priced at Dh152.75, 21K at Dh145.75 and 18K at Dh125 per gram.
The precious metal rallied to a two-year high on June 24, trading as much as $1,362.60 an ounce, after British voters chose to leave the EU. The decision had caught the financial markets off-guard and sent investors running toward gold.
Other analysts are betting on gold to move towards the $1,400 level.
Ole Hansen, head of commodity strategy at Saxo Bank, said gold has seen continued demand from investors using exchange-traded products, with total holdings having accelerated since last Thursday. The demand for gold futures also rose strongly.
“Following the initial surge, gold has settled into a $30 range so far. On Monday, the CME, in response to the spike in volatility, raised the margins for initiating and holding a position in Comex gold futures by 22 per cent,” said Ole Hansen of Saxo Bank.
“This meant that hedge funds holding portions of the present record long position had to deposit more than $250 million in additional margin. This helped trigger some light profit-taking, but so far gold has managed to find support at $1,305 [an ounce], the previous high and now the 50 per cent retracment of the spike seen on Friday.”
“We maintain the view that gold has made a $50 to $70 shift higher in range, which should see it attempt to making it back towards $1,400 an ounce, the 2014 high,” added Hansen.