Time to buy: Dubai gold prices drop, may fall further
A rise in demand for safe-haven asset amid a dip in global prices
Gold prices fell in Dubai on Monday morning in line with a drop in global prices after better-than-expected US economic data lifted prospects for higher inflation.
Spot gold prices fell 0.36 per cent, or $6.51 an ounce, to $1,738.12 by 9.15am UAE time.
In Dubai, retail gold price fell Dh0.75 per gram on Monday morning with 24K priced at Dh210.50 per gram as compared to Dh211.25 on the previous day. Similarly, 22K, 21K, and 18K prices fell Dh0.75 to Dh197.75, Dh188.75, and Dh161.75 per gram, respectively.
The precious yellow metal's price is expected to remain under pressure due to stronger recovery in the US and global economies in the weeks ahead, despite the Covid-19 pandemic challenge.
"Stronger-than-expected data suggests that inflation (will be) picking up faster-than-expected in months to come, which is leading to a rise in real yields, exerting pressure on gold," said Margaret Yang, a strategist at DailyFX.
The US Federal Reserve Chair Jerome Powell said the American economy is at an "inflection point," with hopes that inflation and hiring will accelerate in the coming months. But there are concerns that hasty reopening could lead to a surge in Covid-19 cases.
Some investors view gold as a hedge against higher inflation, but higher Treasury yields dull some of the appeals of the non-yielding metal.
Yang said Asia pacific markets were expected to open higher, but they are trading lower on Monday morning, increasing the demand for the safe-haven asset and the dollar is winning that race, putting further pressure on gold.
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