Gold prices fell on Thursday morning, as the dollar rose sharply after the US Federal Reserve increased interest rates by another 75 basis points and flagged more hikes.
Spot gold dropped to $1,660.7 per ounce by 9.34am UAE time.
The precious metal prices fell by more than one dirham per gram in the UAE on Thursday morning.
According to data from the Dubai Gold and Jewellery Group, the 24K gold price fell to Dh201.25 per gram on Thursday – down from Dh202.5 at the close of the markets on Wednesday.
Similarly, 22K, 21K and 18K prices opened lower, at Dh189.0, Dh180.25 and Dh154.5 per gram respectively on Thursday.
Naeem Aslam, chief market analyst at Ava Trade, said traders are more focused on what is going on with the dollar index.
“The fact is that the index is on fire, and that is taking the shine away from the precious metal", he said. "We did see the prices moving lower last night, and that is likely to be the trend for gold prices today as well.
But at the same time, the sell-off hasn’t been that intense for gold prices, and the reason for that is that many speculators have been preparing themselves for an interest rate hike of a full percentage point by the Fed, which didn’t materialise last night.”
Aslam says the path of least resistance for gold prices is highly skewed to the downside.
“The upcoming weekly jobless numbers are likely to bring higher volatility for gold prices. Make no mistake: the Fed has already indicated the US labour market will experience weakness. But that isn’t going to deter the Fed’s current monetary policy stance,” he said.
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