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Dubai: Gold steady after US Fed chief calms rate hike jitters

Dubai - Spot gold was trading at $1,782.33 an ounce.

Gold prices in Dubai were steady on Wednesday morning after US Federal Reserve Chairman Jerome Powell vowed to keep interest rates unchanged for some time.

However, precious metal gains were capped due to rise in dollar and uncertainty surrounding inflation.

Spot gold was trading at $1,782.33 an ounce, up by 0.27 per cent at 9.15am UAE time.

In the UAE, 24K was trading at Dh215.75 at the opening of the market. While 22K opened at Dh202.75; 21K at Dh193.50; and 18K at Dh165.75 per gram.

“Despite dovish comments from Powell, gold prices have not moved much higher, maybe because of the lingering fear from last week,” Stephen Innes, managing partner at SPI Asset Management, told Reuters.

Gold prices plunged six per cent last week after the Fed struck a hawkish tone and brought forward projections for the first post-pandemic interest rate hikes into 2023.

“Gold could be relatively in a range-bound market until we see further update on inflation and employment data,” Innes said.

However, Powell on Tuesday reaffirmed the central bank’s intent to encourage a “broad and inclusive” recovery of the job market, and not raise interest rates too quickly, based only on the fear of coming inflation.

Gold tends to appreciate on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.

“The rise in ‘dot plot’ projections, showing two policy rate hikes in 2023, shifted the gold market’s focus back towards the tapering timetable,” Standard Chartered analysts said in a note.

“A tapering timetable is still uncertain but is being discussed, which is a downside risk for gold prices,” it said.

waheedabbas@khaleejtimes.com