Dubai:  Retail prices of the precious metal in Dubai fell for a second consecutive day on Thursday morning as the bullion failed to maintain its Tuesday’s gains on the back of a stronger US dollar.

The yellow metal fell 0.5 per cent on Wednesday and eased 0.1 per cent to $1,132.45 an ounce by 0637 GMT, according to Reuters.

In Dubai, retail prices dropped further to Dh136.75 per gram for 24-carat gold, down by Dh1.25 compared to Tuesday’s rate.

The price for 22K dropped to Dh130, while 21K eased down to Dh124.75 and 18K to Dh107.75. Ten tola gold bar stood at Dh15,665, down from  Dh15,800 on Tuesday.

Analysts are expecting the bullion to incur more losses in the coming months, with the global price forecast to hit $1,000 an ounce by December this year. Spot gold is likely to drop further in the coming year, hitting as low as $800 an ounce by December 2016, according to ABN Amro’s forecast.

Aside from the US dollar, expectations that the United States Federal Reserve will increase interest rates this year are also affecting gold prices. With the payrolls data in the US out on Wednesday, there is a likelihood that the anticipated interest rate increase will indeed happen before the end of the year.

"Gold is awaiting the payroll data for indications of Fed intentions at the September FOMC meeting. So the market may move sideways until the numbers are released," said HSBC analyst James Steel, referring to the Fed's Federal Open Market Committee.

The US dollar is forecast to strengthen further against other currencies before the end of the year. According to John Hardy, head of FX Strategy at Saxo Bank, the US dollar/yen currency pair is poised to rise to more than 130 in the coming months.

“There could be upside risk to this assessment if the Bank of Japan feels that it can move one more time to ease policy due to the deflationary effects of crashing energy and other commodity prices and the Chinese currency devaluation, but the yen is already quite weak and the cycle is mostly over with for now,” Hardy said in a note sent to Gulf News.

The U.S. central bank has pegged the likelihood of a rate increase to the strength of economic data. A strong jobs report could prompt the Fed to increase rates sooner than later.

Bullion traders remain wary of taking up fresh positions until they receive more clarity on whether the Fed will raise rates at its next meeting on Sept. 16-17.

Gold Rate: To keep up to date with gold prices, go to our gold rate page.

Currency Rate: To keep up to date with latest exchange rates, go to our currencies page.

-- With reports from Reuters