UAE: Gold prices drop in Dubai in early trade

Gold prices edged lower on Monday morning as investors assessed some risk of aggressive rate hikes expected this week by major central banks especially the US Federal Reserve to tame inflation.

Spot gold was down 0.64 per cent at $1,668 per ounce as of 9.10am UAE time.

Gold prices fell by one dirham per gram in the UAE at the opening of the markets on Monday. The Dubai Gold and Jewellery Group data showed 24K trading down one dirham at Dh202.0 per gram. While 22K, 21K and 18K also opened lower at Dh189.75, Dh181.0 and Dh155.25 per gram, respectively.

Analysts expect Fed to hike rates by 75 bps at the upcoming meeting on Wednesday.

Following the stronger-than-expected inflation data on Tuesday, the Federal Reserve will raise the Fed Funds target rate by 75bp to 3.25-3.50 per cent at Wednesday’s meeting, says James Swanston, economist for the Middle East and North Africa at Capital Economics.

Last week, gold witnessed a weekly decrease of more than three per cent reaching a 2-year low, under the pressure of a stronger dollar and rising US Treasury bond yields, the yellow metal dropped to its lowest levels since Covid, driving the price below a key support level of $1,700.

“Investors will be keeping an eye on the Fed Interest rate hike as rumours regarding a 100 bps US Fed interest increase is heavily impacting commodities, especially the yellow metal, the Fed considers bringing inflation down as top priority, the rumour surged after the US published a higher-than-expected Consumer Price Index (CPI) at 8.3 per cent against 8.1 per cent expected,” said Vijay Valecha, chief investment officer at Century Financial.

waheedabbas@khaleejtimes.com

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