Gold prices drop over Dh1 per gram
Gold prices in the UAE experienced a notable decline of over Dh1 per gram as trading commenced on Monday. The 24K variant, a prominent choice among buyers, saw a drop to Dh260.0 per gram, marking a decrease from the previous week's closing price of Dh261.25 per gram. Similarly, other variants followed suit, with 22K opening at Dh240.75, 21K at Dh233.0, and 18K at Dh199.75 per gram. Globally, spot gold also witnessed a decrease of 0.43 percent, trading at $2,147.3 per ounce at 9:20 am UAE time.
This decline in gold prices follows a period of sideways trading, prompted by the reaction of traders to last week's stronger-than-expected US inflation data. The unexpected surge in inflation led to a pause in gold's upward momentum, which had persisted for three consecutive weeks. Traders are now reassessing their expectations regarding potential interest rate cuts by the Federal Reserve this year in light of this new economic data.
George Pavel, the general manager at Capex.com Middle East, commented on the situation, noting that the unexpected rise in inflation has introduced a degree of uncertainty into the market. This uncertainty, coupled with a resurgence in treasury yields, has exerted downward pressure on gold prices. However, Pavel highlights that market sentiment continues to anticipate the commencement of interest rate cuts by June.
Looking ahead, the trajectory of the gold market is expected to be heavily influenced by the outcome of the upcoming Federal Open Market Committee (FOMC) meeting. Investors are keen to monitor the Federal Reserve's economic projections and the comments of its president following the meeting. Any indication of a hawkish stance on monetary policy from the central bank could further weigh on gold prices.
In summary, the recent decline in gold prices in the UAE and globally can be attributed to the market's response to stronger-than-expected US inflation data. As traders reassess their expectations regarding potential interest rate cuts by the Federal Reserve, uncertainty prevails in the gold market. The outcome of the upcoming FOMC meeting is anticipated to provide further insight into the future trajectory of gold prices, with investors closely monitoring the Federal Reserve's stance on monetary policy.
By: Sahiba Suri
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