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US dollar is a zit ready to pop... Gold will rebound sharply

posted on Oct 24, 2008 06:04AM

Drop in prices sparks gold rush in Abu Dhabi

By Dr Abdul Hadi Al Timimi, Abu Dhabi Editor
Published: October 24, 2008, 15:29

Abu Dhabi: Huge crowds jammed gold shops in Abu Dhabi to take advantage of the drop in gold prices to Dh80 per gram on Thursday night and shop owners expect the rush will continue for a week until the Diwali festivities.

Shop owners estimate that each shop in downtown Abu Dhabi sold about 30 to 50 kilos. "Sales have gone up 400 percent,” said the chairman of the Golden Jewelry Group.

Gold prices had dropped to Dh84 per gram in August, but there were no such scenes of people fighting queues to get to the gold, shop owners said. They expect the prices to go up from next week.

Gold fell for a fourth day in Asia and headed for its second weekly decline as the rising dollar and a slump in equities curbed investor demand for the precious metal.

Gold is down 8.4 per cent this week as the dollar rose to a 23-month high against the euro.

"The decline in the gold price is not only linked to a further strengthening in the US dollar but also evidence that physical buying of gold via ETFs is beginning to fade," Deutsche Bank AG analysts wrote in a weekly report on Friday.

"Given the ongoing appreciation in the US dollar, we estimate fair value for gold to be between $600-$620 an ounce," they said.

In Singapore, gold for immediate delivery fell 0.5 per cent to $718.08 an ounce, while gold for August delivery in Tokyo dropped 2.1 percent to $713 an ounce.

In Europe, gold fell nearly 5 per cent on Friday as a surge in the US dollar curbed interest in the precious metal.

Spot gold fell to $684.90 an ounce, a new 13-month low, before recovering to trade at $686.20/688.20 at 0923 GMT.

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