By Sachin Kumar
DOHA: Demand of gold is likely to boost in Qatar this year as its prices are expected to remain soft. The yellow metal lost its sheen with its prices declining by about 11 percent in 2015.
A gramme of 24-carat gold in local market was trading at QR146 on the first day of January last year while at the end of 2015 same gold was trading at QR131. Price of one gramme of 22-carat gold fell from QR137 in January to QR122 at the end of December 2015.
Gold is unlikely to see any major positive turn around this year and its prices are expected to remain soft, say experts. “Gold is co-related with crude oil and prices of both commodities move in tandem. Crude oil prices are unlikely see any substantial recovery in current year,” said a senior official of jewellery store in Doha.
Weak gold prices are good sign for gold consumption in Qatar, he said. “If we look at the past, fall in gold prices have proved good for our business. Last year in July, when gold prices fell to five year low of QR137 per gramme, we saw people rushing to buy gold jewellery and bars,” he added.
Gold demand is expected to remain low because of slow down in global economy, mainly in China. China is the second biggest consumer of gold in the world which consumed around 813 metric tonnes of gold in 2014.
“Most of the demand of gold in Qatar comes during Ramadan and Eid when expatriates and Qataris prefer to buy jewellery,” said a branch manager of jewellery store.
After touching peak in the second half of 2011, the price of 24-carat gold in Qatar showed some sign of moderation and moved between QR180 and QR200 until September 2012. It went up to QR210 again in October 2012 but started declining trend which is still continuing. The recent fall in the yellow metal is driven largely by the strengthening of US dollar on the expectation of interest rate hike by US central bank in last year.
After much delay, US Federal Reserve raised interest rate in December 2015. Increase in US interest rates will strengthened the dollar, prompting more fund outflows from Gold and other commodities to the American currency. Federal Reserve is again expected to raise interest rates this year which again strengthen dollar which in turn will weaken gold and other commodities.
The Peninsula
