Gold prices jumped more than Dh1 per gram in the UAE on Wednesday morning as global rates of the precious metal stayed above $2,000 an ounce on the US Federal Reserve’s rate cut hopes.
According to Dubai Jewellery Group data, the 24K was trading at Dh247 per gram at the opening of the markets on Wednesday — up by Dh1.25 per gram from Dh245.75 when the markets closed. Its variants 22K, 21K and 18K opened at Dh228.75, Dh221.5 and Dh189.75, respectively.
Spot gold was little changed at $2,040.08 per ounce, as of 9.25am, UAE time.
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In the past week, the Federal Reserve kept interest rates remained unchanged at 5.25-5.50 per cent in its latest meeting, emphasising its goal of curbing inflation by the end of 2023, with no planned interest rate hikes in 2024.
Rania Gule, market analyst at XS.com, said markets widely expect interest rates to be lowered at least three times by 25 basis points each in 2024. “Thus, the core inflation reading in the US will impact market expectations for the timing of the Fed’s easing, potentially pushing the US dollar to its lowest level in four months, and acting as a supporting force for gold in the medium term.”
Gule believes that gold started the new week positively, holding onto modest gains despite a lack of upward momentum.
“Key Federal Reserve officials attempted to temper expectations regarding early interest rate cuts. In my view, this strong sentiment may contribute to risk appetite in global stock markets, limiting the upward trend of gold, considered a haven,” she added.
However, Gule said, investors are eagerly awaiting important data, leading to a sideways market before the release of the core Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation gauge, next Friday. “This will significantly influence market expectations regarding the timing of the Fed’s policy easing, providing real momentum to stimulate the economy. This supports the strength of non-yield-bearing gold.”