CAIRO: If you are looking for an excuse to buy some gold jewelry, now is the time. The yellow metal slid to an eight-month low which may increase demand and lend the commodity a boost in price. "Gold prices have plunged 25 percent from peak levels at $1,020 an ounce end of February, said Rafik Abassi, head of gold committee at the Egyptian Federation of Industries. "Prices currently plummeted as low as $763 per ounce. Gold is moving broadly in line with other commodities and in an inverse pattern with the dollar, he added. "Gold isn t the only commodity that has suffered losses as the dollar rallied. Most metals are tumbling too. Globally, investors switching into the US dollar - which has recently been strengthening - switched out of precious metals and other commodities, pushing gold futures at the New York Mercantile exchange down. Gold typically moves in opposite direction to the US currency, as it is often bought as a currency hedge. A stronger greenback tends to push down gold prices because it makes gold less appealing as an alternative investment. Bullion tumbled 7.1 percent last week alone, while the dollar rose 1.9 percent against the euro last Thursday. The precious metal fell to $752.55 per ounce in New York on Wednesday - down 6 percent in two days - the sharpest two-day loss since March. Meanwhile, the greenback hit a fresh one-year high against the euro on Thursday, as investors refocused on sluggish economic prospects outside the United States. Closer to home, gold prices also skidded, with the price of one gram of 21 carat gold sinking LE 4.5 to LE 115on Thursday, down from last winter's LE 145-a-gram level. Abassi pointed out that the current decline in energy prices is another factor pulling gold prices down. "Gold and oil prices are correlated. When oil prices go down, gold price follow suit. In last Friday's trading at the New York Mercantile Exchange, light oil price for October delivery was closed at $102,58 per barrel, declining $0.68 compared to the previous day. Analysts explain that a dip in energy prices calmed investors about high inflation and prospects of the global economy, halting last winter's gold rush. "Historically, investors [put their money] into gold in uncertain and volatile markets. This has been the trend for a long time, Angus Blair, head of research at Beltone Financial, previously told Daily News Egypt. Battered gold prices have driven some speculation that the yellow metal has finally hit bottom and could rebound to $900 an ounce. "Gold prices might already be trading at oversold levels, wrote Tobias Merath, head of commodity research at Credit Suisse, in a note released Thursday. Fundamentals still speak in favor of a recovery to $900 or slightly higher in the next few months. Some experts explained investor demand for physical gold is still strong, particularly from heavy consumer-driven markets such as Mumbai and Dubai, which helped hold gold up well. Investors in physical metal appear to be taking the drop in prices as an opportunity to buy more metal at lower prices, Jeffrey Christian, managing direct of commodities consultancy CPM Group, told Market Watch on Thursday. Other analysts pointed out that a further sharp appreciation of the dollar is unlikely given the problems in the US financial system, which witnessed the most dramatic change in decades when the Treasury Department announced that the government will take over Fannie Mae and Freddie Mac, the home mortgage loan giants. Meanwhile, Abassi said it was difficult to predict future trends in gold, as they are subject to external factors such as the US dollar and oil prices. "However, demand could pick up by the end of Ramadan, which will in turn trigger a rally in gold prices, he said. "Generally speaking, each Ramadan, we see a slump in gold sales.
