UAE: Gold hits over 2-week low, prices drop Dh2 per gram in Dubai

Gold prices dipped on Monday morning to their lowest in more than two weeks, as bets for an increasingly aggressive and hawkish US Federal Reserve approach to tightening monetary policy boosted the dollar and pressured demand for bullion.

Spot gold was down 0.83 per cent at $1,916.99 per ounce, as of 9.15 am UAE time.

In the UAE, the yellow metal price fell Dh2 per gram at the opening of the market on Monday.

The Dubai Gold and Jewellery Group data showed 24K trading at Dh232 per gram, down Dh2 per gram from its previous close. Among the other variants of the precious metal, 22K opened at Dh218 per gram, 21K at Dh208 and 18K at Dh178.25 on Monday morning.

Although the 10-year US Treasury yield is nearing three per cent and theoretically that's supposed to be a tipping point for gold, it is more about real yields that are starting to catch up and that will weigh on gold, Stephen Innes, managing partner at SPI Asset Management, told Reuters.

With expectations for a half-percentage point interest rate hike at the Fed's May meeting now locked in, traders on Friday piled into bets that the US central bank will go even bigger in subsequent months.

The dollar firmed near its highest in two years, making greenback-priced gold costlier for other currency holders.

Gold is highly sensitive to rising US short-term interest rates and higher yields, which increase the opportunity cost of holding non-yielding bullion. It is, however, seen as a safe store of value during economic and political crises.

waheedabbas@khaleejtimes.com

• Dubai