UAE: Gold prices drop in Dubai on first trading day of the week

Analyst believes that statements made by the Federal Reserve Governor last week indicate a more cautious approach to monetary policy adjustments

by

Waheed Abbas

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Published: Mon 22 Jan 2024, 9:30 AM

Gold prices fell half a dirham per gram in the UAE on the first trading day of the week.

The Dubai Jewellery Group data showed 24K trading at Dh245.25 per gram on Monday as compared to last week’s closing of Dh245.75 per gram. While 22K, 21K and 18K also opened lower at Dh227.0, Dh219.75 and Dh188.5 per gram, respectively.

Spot gold edged 0.12 per cent lower at $2,025.18 per ounce at 9.12 am UAE time as traders braced for fresh data on US economic growth and the Federal Reserve's preferred inflation gauge due later this week.

Rania Gule, market analyst at XS.com, believes that the statements made by the Federal Reserve Governor last week, stating that there is "no reason to move quickly or cut interest rates quickly," indicated a more cautious approach by the Fed to monetary policy adjustments.

“Despite this caution, the Fed is ready to begin interest rate cuts if there is a clear and sustained decline in inflation rates,” said Gule.

Ole Hansen, head of commodities strategy, Saxo Bank, said gold and silver are stuck in ranges while speculation continues about the timing, pace and depth of future US and EU rate cuts.

“Until the first cut is delivered, the market may at times run ahead of itself, in the process building up rate cut expectations to levels that leave prices vulnerable to a correction, like to one we saw during the week when gold almost touched $2,000. With that in mind, the short-term direction of gold and silver will continue to be dictated by incoming economic data and their impact on the timing and pace of future rate cuts,” added Hansen.

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