Dubai: Gold prices drop further; 22K trades below Dh200 per gram

Dubai - Spot gold fell 0.33 per cent to $1,753.68 per ounce at 9.30 am UAE time on Wednesday.

Gold prices fell in Dubai in line with the decline in global rates on Wednesday morning with 22K dropping below Dh200 per gram as the dollar strengthened further and US Treasury yields rose.

Spot gold fell 0.33 per cent to $1,753.68 per ounce at 9.30 am UAE time on Wednesday.

In the UAE, the Dubai Gold and Jewellery Group data showed 24K trading at Dh212.25 per gram, 22K at Dh199.25, 21K at Dh190.25 and 18K at Dh163.0 at the opening of the market on Wednesday.

The dollar held close to its highs for the year on Wednesday, denting gold's appeal for those holding other currencies, the benchmark 10-year yield also ticked higher.

Analysts say that the investors are focused on Friday's US payrolls data which is forecast to show that 488,000 jobs were added in September, and would be crucial to the Federal Reserve's timeline for tapering economic support.

Naeem Aslam, chief market analyst at AVA Trade, said the US payrolls data scheduled to be released later this week is crucial as it is used by the central bank to assess the state of the nation’s labour market.

“As long as the report comes out as ‘decent’, the Federal Reserve will continue with its plan to wind down quantitative easing. Although inflation is on the rise and the precious metal is seen as a hedge against rising consumer prices, a reduction in the Fed’s stimulus and an uptick in interest rates are going to increase the opportunity cost of holding gold and push its price down,” said Aslam.

Christopher Vecchio, senior strategist at DailyFX, said the yellow metal prices established a series of “lower lows” throughout September, and the rebound thus far in October has not broken that trend.

“The recent rebound has found itself pausing at a confluence of technical resistance... It remains the case that ‘a drop below $1,700 in the next few weeks – particularly if the US debt ceiling deadline passes without issue – is very much on the table,” said Vecchio.

waheedabbas@khaleejtimes.com

• Dubai