Albeit the price of gold was receiving fewer and fewer tailwinds from both financial markets and physical trading, Gerhard Schubert, head of commodities at bank Emirates NBD, said it was too early to call gold off as an asset class.
After a brief rally above 1,400 US dollars per ounce at the end of last month, triggered by the escalation of the Syrian crisis, the price of the yellow metal fell during the second week of September by 2 dollars or 0.15 percent to 1,325.50 dollars per ounce.
In his weekly commentary published on Saturday, Schubert said Dubai's biggest bank Emirates NBD was still recommending that gold should represent between 2 and 5 percent within an investment portfolio, "due to its mostly negative correlation with other asset classes."
Regarding its lackluster price performance during the week, Schubert said gold was currently "in no-man's land and there appears to be no need for fresh buying unless the market is able to break the major resistance level at 1,425 dollars."
Because the US federal reserve decided on Wednesday -- unexpectedly as Schubert said -- not to wind down monetary easing by tapering its monthly bond purchases of 85 billion dollars, there was no change in the impact of American monetary policy on the price of gold, said Schubert.
In addition, physical markets were still very slow, according to the Emirates NBD commodities expert, "and the only upside appears to be the strengthening of the Indian Rupee, which makes gold in Rupee terms a little less expensive."
The Indian currency advanced slightly against the greenback during the week to reach 62.83 to 1 but it is still trading 13 percent below the exchange rate from the beginning of the year.