UAE: Gold prices plunge, likely to drop further

Gold prices fell on Wednesday morning, as the US dollar and Treasury yields rose after economic data bolstered expectations the Federal Reserve will continue on an aggressive rate-hike path.

Spot gold was down 0.58 per cent at $1,693.66 per ounce at 9.10 am UAE time.

In the UAE, the 24K gold price fell Dh1.75 per gram to Dh205.0 at the opening of the markets on Wednesday. Similarly, 22K, 21K and 18K prices dropped to Dh192.75, Dh183.75 and Dh157.5 per gram, respectively.

Edward Moya, a senior market analyst at Oanda, said gold is back in the danger zone as global bond yields are skyrocketing.

“The US economy is looking pretty good and that has many traders starting to doubt that we’ve seen the peak in yields. Gold is in trouble here if the bond market selloff is the dominant theme of the trading week. Fixed income markets are getting flooded with corporate debt offerings and central banks seem like they will be aggressive with front-loading rate hikes right now. It could get ugly quickly if gold breaks below the $1,690 level as there isn’t much support until $1,650,” said Moya.

Thomas Westwater, an analyst at DailyFx, said gold prices are moving lower through Asia-Pacific trading, extending overnight declines as the US dollar and Treasury yields climb.

“The markets are adjusting to price in a Federal Reserve that appears ready to continue its policy tightening through rate hikes and quantitative easing, even if it comes at the expense of economic growth,” he said.

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