Dubai: Gold prices inch up as dollar weakens

Staff Report/Dubai
Filed on June 28, 2021

Weaker-than-expected US inflation allayed worries about an early monetary policy tightening by the Fed.

Gold prices were stable at the opening of the global markets on Monday morning as dollar fell and weaker-than-expected US inflation allayed worries about an early monetary policy tightening by the Fed.

Spot gold was up 0.01 per cent at $1,782.55 per ounce by 9.18am UAE time. In the UAE, precious metal prices remained unchanged on Monday morning. The Dubai Gold and Jewellery Group data showed 24K trading at Dh215.75 per gram, 22K at Dh202.75, 21K at Dh193.5, and 18K at Dh165.75 at the opening of the market on Monday.

The dollar index eased 0.1 per cent against rivals, making gold cheaper for holders of other currencies.

Commodity analysts say that the Basel III rules, which will come into effect this week, will dictate the gold prices. Under these new rules, allocated gold will become a zero-risk asset for European banks while unallocated/paper gold will be considered risky and banks will need to collateralise 85 per cent of the value with cash.

The new Basel III framework comes into force on June 28 for European banks and on January 1, 2022, for British banks, which would be a great game-changer for physical demand.

In addition, the US inflation data allayed fears of an early monetary policy tightening by the Federal Reserve.

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