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Strong Rupee Drives Up Gulf Gold

08/10/2012 01:01
Bracelets on sale at the Gold Souk in Dubai

Bracelets on sale at the Gold Souk in Dubai

Gold purchases are up in the Gulf region as a result of the strong performance of the Indian rupee, according to an expert from Emirates NBD.  According to the bank’s Precious Metals Report, the price of gold is expected to continue to rise, despite already hitting record levels.

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Gerhard Schubert, Head of Precious Metals at Emirates NBD wrote in the report that the Indian rupee ended the week at 51.91 to the US dollar, which fueled demand on the gold market, bringing prices up $10 from the previous week to $1782.00.
He wrote, “The gold market traded up over the course of last week and reached an 11-month high on Friday after touching US$1796.
“The positive NFP numbers triggered some profit taking, which saw gold falling back to the mid US$1770 levels before recovering to close the week at the US$1782 level.
“It looks pretty clear that the market is long and overbought, but there is lack of news that could trigger a wash-out in order to potentially facilitate fresher buying.  The initial resistance at US$1790 is now consigned to history books, but the US$1800 level seems to grow in importance.
“This level, however, is mostly psychological, and the regaining of the US$1800 would lead to an even stronger bullish mode for gold.
“There are many analysts out there who are now amplifying the call that gold could still reach the US$2000 within 2012, something which we have advocated without fail all this year.”
As for the Gulf region in particular, Schubert noted that, “Physical buying in the region has been good, Gold kilo bars loco Dubai are trading again with a small premium against loco London.  The strength of the Indian Rupee has been a very strong factor in this turnaround.”
Photo credit: Joi, Flickr
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Author:    Maryam Aziz
Tags:    UAE     Dubai     Emirates NBD     commodities     gold
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