Gold falls below $1,800; 24K slips to Dh219 in Dubai
Spot gold was trading at $1,777.88 an ounce at 4.30pm UAE time on Thursday afternoon, down 2.2 per cent
Gold prices fell below $1,800 an ounce on Thursday afternoon and US Federal Reserve (Fed) signalled that it may raise interest rates earlier than expected, pushing dollar also to its strongest single day gain in 15 months.
Spot gold was trading at $1,777.88 an ounce at 4.30pm UAE time on Thursday afternoon, down 2.2 per cent or $40.5 an ounce.
In the UAE, 24K price fell by nearly Dh6 to Dh219 per gram on Thursday afternoon, while 22K to Dh205.5, Dh21K to Dh196.25, and 18K to Dh168.25 per gram.
It is the precious metal’s biggest drop in five months.
The Fed on Wednesday began closing the door on its pandemic-driven monetary policy with 11 out of 18 Fed officials projecting at least two quarter-point interest rate increases for 2023.
Vijay Valecha, chief investment officer at Century Financial, said change in the Fed script benefited the dollar and treasury yields and weighed on the non-yielding metal.
Technically, the metal has dropped below the key 200-day moving average and the path of least resistance for gold seems skewed to the downside.
“A break below the psychological mark of $1,800 could see the metal slide to $1,785 followed by $1,765. On the upside, $1,840 is seen as a strong resistance for the metal.”
In the UAE, he said next support for 24K is seen near Dh214 and resistance near Dh224.
Naeem Aslam, chief market analyst at AVA Trade, said the rally within the US bond market lost steam, anticipating the outcome of the Fed’s meeting schedule to be held this week.
“The decline in interest rates and the provision of economic stimulus have supported the rise in prices of precious metals over the last twelve months. However, stock traders are concerned that rising inflation and the economic recovery are likely to convince Fed to withdraw its support,” he said.
Jeffrey Halley, senior market analyst at OANDA, said the precious metal was crushed due to Fed’s hawkish tone.
He advised that the recovery in gold prices should be approached with caution and a drop below $1,797.50 will signal a deeper correction.
Rashad Hajiyev, senior analyst at RM Capital Analytics, said advance in gold price will be as swift as the decline.
“Expect to get a strong bounce from present levels within 1-2 days.”
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