UAE: Gold prices rally takes a breather, dips in early trade

Gold prices took a breather in the UAE on Wednesday morning after a two-day rally, dropping slightly at the opening of the markets.

The Dubai Jewellery Group data showed 24K trading at Dh225.25 per gram on Wednesday morning compared to Dh225.5 on Tuesday. While 22K, 21K and 18K were trading at Dh208.5, Dh201.75 and Dh173.0 per gram, respectively. Spot gold was trading at $1,859.24 per ounce as of 9.48 am UAE time, down 0.03 per cent.

The precious metal prices were at a one-week high as the US dollar edged lower after several US Federal Reserve officials suggested that the recent surge in Treasury yields might make further rate hikes less necessary. The yellow metal rallied at the start of the week due to the Israel-Palestine conflict.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said the FOMC minutes due today will remind investors that “the rates will stay higher for longer” if inflation remains above target.

“Going into the data, the expectation is a mostly softening inflation both for producer and consumer prices. Despite the rising crude prices, US gasoline prices have been falling since mid-August due to a collapse in refiner margins. The latter could temper a seasonally strong September spending. But how long gasoline prices will remain on a falling path is yet to be seen,” he said.

Ozkardeskaya added that the risks in US yields remain tilted to the upside despite the dovish Fed talk and the safe haven inflows into the US treasuries following mounting tensions in the Middle East. The US 2-year yield remains 50bp above the upper range of the Fed funds policy target.

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