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Gold prices in UAE slump nearly Dh3 per gram in early trade
Precious metal hits over one-week low as firm Treasury yields, dollar dim appeal
Reuters file
Gold prices hit a more than one-week low on Wednesday morning, as a firmer US dollar and Treasury yields continued to weigh on bullion demand.
Spot gold was down 0.3 per cent at $1,944.58 per ounce at 9.10am UAE time.
Precious metal prices in the UAE fell nearly three dirhams per gram on Wednesday morning as compared to their previous close.
According to Dubai Gold and Jewellery Group data, 24K was trading at Dh235.25 per gram at the opening of the market as against Dh238 at the close of the market on Tuesday. Among the other variants of the precious metal, 22K opened at Dh221 per gram, 21K at Dh211 and 18K at Dh180.75.
On Tuesday, prices fell up to 1.8 per cent as a stronger dollar and rising Treasury yields overshadowed inflows into bullion.
Jeffrey Halley, senior market analyst at Oanda, said the price fall has been blamed on rising US yields and US dollars overnight, but this position is irrational given that gold has happily rallied in similar conditions over the past week.
“A much simpler and far more likely reason is that the fast money traders who bought gold for the test of $2,000 have been squeezed out of their positions. Gold fell short of a material test of $2,000 an ounce earlier this week, peaking at $1,998.50 an ounce. The fall through $1,970 triggered stop-loss selling of those positions, pushing it lower in one-way price action to $1,950,” said Halley.
He added that the yellow metal still looks vulnerable and failure of $1,940 could see more speculative long positions getting culled and gold falling to $1,915 an ounce.
“Gold still has resistance at $2,000 an ounce, and I believe option-related selling there will be a strong initial barrier. However, if $2,000 is cleared, gold could gap higher to $2020 an ounce quickly, and potentially, a retest of $2,080 an ounce. Failure of $1,915 will signal a retest of important support at $1,880 and possibly $1,800 an ounce. The question is whether the overnight fall is a short-term correction, or something larger,” added Halley.
waheedabbas@khaleejtimes.com
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