Dubai: Gold, silver prices see big drop; 24K slips below Dh500

Gold and silver prices plunged in Dubai and globally on Tuesday evening as the yellow metal fell below Dh500 per gram.

Globally, spot gold fell more than 5.3 per cent to $4,092 per ounce at 7pm UAE time, and it is on track for the steepest daily fall in five years on Tuesday. It hit a record high of $4,381 per ounce on Monday, while silver plunged below $50 to $48.37 at 7 pm UAE time on Tuesday, losing over 7.4 per cent.

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In Dubai, 24K fell to Dh499 on Tuesday evening, losing Dh22.75 on Tuesday. Similarly, 22K, 21K and 18K also slipped to Dh462.25, Dh443.25, and Dh379.75 per gram, respectively.

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The precious metals retreated after a record rally in both gold and silver as US dollar rose and investors booked profit.

Daniela Hathorn, senior market analyst at Capital.com, said gold and silver face a heavy selloff as trade tensions between the US and China eased.

“Gold and silver have been garnering a lot of attention in recent weeks as they staged an impressive rally that led the precious metals to break several record highs. The momentum was driven by a combination of factors, including safe haven demand on the back of escalating geopolitical tensions and fiscal constraints, expectations of lower rates from the Federal Reserve, and improved fundamentals. However, the upside has run out of steam this week,” he said.

“The trade had become quite overcrowded and was running a little hot considering the levels both markets were at, so a reversal is not entirely out of the blue. The catalyst for the pullback has been the perception of easing tensions between China and the US after US President Donald Trump said that he expects to make a trade deal after meeting with China’s President Xi Jinping in South Korea later this month,” said Hathorn.

He elaborated that the confirmation of willingness to resolve the US-China issues has been enough to remove some of the risk premia in markets, at least for now.

“Both gold and silver were primed for a pullback so there is likely some profit-taking which has deepened the reaction. The fundamentals haven’t changed, with long-term support still in place, however, the strength of the rally over the past month was somewhat unjustified, leading to the chance of a deeper pullback on the back of this news of positive trade developments,” he said.

For silver, he sees the supply shortage is likely to remain a significant driver in the next twelve to eighteen months as demand from the renewable energy sector is expected to increase.

Waheed Abbas

waheedabbas@khaleejtimes.com

Waheed Abbas is Assistant Editor, covering real estate, aviation and other business stories that directly affect the lives of UAE consumers. He frequently reports human interest stories, too.