KUWAIT: Gold prices have rebounded in December following a two-month drop triggered by a looming decision by the US Federal Reserve to raise interest rate. Gold prices recorded the highest rate this year, hitting $1,346 per ounce in September, as against roughly $1,273 and $1,161 per ounce in November and early this year respectively.
As the Federal Reserve raised interest rates to a range of 1.25 to 1.50 percent on December 13, gold prices amounted to around $1,260 per ounce, compared with $1,238 in the previous day. However, it left its rate outlook for the coming years unchanged even as policymakers projected a short-term jump in US economic growth from the Trump administration’s proposed tax cuts. The US central bank raised rates by a quarter of a percentage point to a range of 1.25 percent to 1.50 percent. It was the third rate hike this year.
The recent US rate depreciation has pushed many investors to resort to gold instead of dollars since it is considered a safe haven in the event of economic crises. In this context, experts said that the dive in gold prices over the last couple of months was expected due to forecasts of the Federal Reserve’s decision, expecting gold recovery at the advent of next year.
Sabaek Al-Kuwait Company’s General Manager Rajab Hamed said there was a recent high demand for gold, occasionally hitting 50 percent especially regarding alloys, which are a “new and safe” investment source. Hamed anticipated gold prices to improve by over 10 percent in the first quarter of this year, believing that gold has proved firm in spite of repeatedly increased US interest rates this year. Gold prices have rebounded this year following a hike in US interest rates, he said, adding that gold prices always nosedive with an approaching US decision to raise interest rates.
Commerce and Industry Ministry’s Precious Metals’ Department Acting Manager Saad Al-Saidi said local demand for gold during the last four months went down, as against the same period last year. External gold quantities hit around 3.720 tons of different gold karats during the reported period, compared with 4.184 tons during the same period last year, he added. On consumers’ indexes, he pointed out an increasing demand for alloys of different sizes during the last period, reflecting investors and citizens’ desire to buy gold as a feasible investment opportunity.
Meanwhile, Ali and Nasser Al-Sayegh Jewellery Company’s General Manager Nasser Al-Sayegh said gold prices in Kuwait are linked to the world bourse, and high or low gold prices depend on occasions, rather than world prices. Local jewelry sales often largely increase during Eid Al-Fitr and Eid Al-Adha as well as wedding parties, he pointed out. Kuwait’s current growing demand for gold reflects investors’ search for fresh opportunities, he said, estimating gold investment returns at a range of 10 to 15 percent. —KUNA