Decline in Dubai Gold Prices
The gold price in Dubai dropped drastically on Friday, with the rates falling by Dh5 per gram in the opening session. The Dubai Jewellery Group said on Friday morning that prices for 24K were down at Dh293.50 per gram from Dh298.50 per gram following Thursday’s close. Other colours of gold were also sliding at 22K, 21K and 18K, at Dh271.75, Dh263.25 and Dh225.50 per gram, respectively.
PC: Zawya
Market Analyst Insights
Kelvin Wong, a senior market analyst for Asia Pacific at Oanda, said this was due to profit-taking following the recent surge in gold prices. He, however, remains optimistic over the medium-term outlook due to political uncertainty and expectations for rate cuts. As he says, these are some of the factors that could bolster the price of gold.
Gold Price Trends, Globally
The gold price has been highly volatile across the globe lately, hitting all-time highs. According to a market analyst at xs.com, Antonio Ernesto Di Giacomo, gold prices surged to $2,483.00 per ounce on July 17, higher than expected. This resulted from expectations of interest rate cuts by the Federal Reserve in September, due to weak Consumer Price Index inflation data and signals of cooling in the US economy.
Factors Driving Gold Demand
Confidence of investors in future monetary policies has played a big role in gold prices. One of the major catalysts was the probability of a 25-basis-point rate cut by the Federal Reserve in September, which was pointed to by CME FedWatch with more than 90% probability. Lower interest rates raise the appeal of non-interest-bearing assets such as gold. This generally raises demand and places upward pressure on its price.
Also Read: Top Jewellery Brands in Dubai
Economic Indicators and Gold’s Safe Haven Status
The probability of an imminent rate cut into the economy has strengthened on economic indicators foreshadowing a slowdown in the US economy. Under such a perception, gold turns very apt as an instrument of present investment, since most investors want to play safe amidst economic uncertainties. Antonio sees that, with the high possibility of the rate cut coming in September, the demand for gold might continue to remain really strong, hence further underpinning it as a preferred asset during times of economic unpredictability.
While Dubai has witnessed a correction in gold prices due to some profit-taking and market adjustments, global trends have been quite strong and move upward, including the recent geopolitical tensions and bets on monetary easing from the Federal Reserve. Investors and analysts eye economic indicators and Fed policy signals for clues to further movements in gold prices over the coming weeks and months. Against the backdrop of lingering uncertainties in global markets, gold remains the mainstay for investors eyeing security and stability in their portfolios.
