Gold prices plunged Dh7 per gram in Dubai on Monday evening as global prices lost over two per cent due to US recession fears sparking a broader sell-off.
Dubai Jewellery Group data showed a 24K variant of the yellow metal trading at Dh289.75 per gram on Monday evening, compared to Dh296.75 per gram at the opening of the markets today. This was one of the biggest falls in a day in recent history.
Among the other variants, 22K, 21K and 18K cost Dh268.25, Dh259.75 and Dh222.75 per gram, respectively. Spot gold was trading at $$2,405.78 per ounce, down 1.45 per cent at 7.50 pm UAE. It was trading at $2,447.5 per ounce at 9 am UAE time earlier today.
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Analysts expect this to be a temporary issue.
Swiss bank Julius Baer said weak economic data, rising geopolitical tensions in the Middle East, and somewhat disappointing earnings reports, particularly from the technology behemoths, have led to a sell-off in equity markets.
“Lower oil prices suggest that weaker-than-expected economic data is the main concern for financial markets, rather than geopolitical concerns and the potential for oil supply disruptions. We view the current batch of soft data as a temporary pause in the ongoing economic recovery and continue to price in a low risk of recession,” Baer said.
William Jackson, chief emerging markets economist at Capital Economics, said fears of a US recession have rattled emerging markets (EM) equities at a time when these economies are showing more pronounced signs of weakness.
“The run of weaker-than-expected data out of the US last week has rattled global financial markets. And there have been large sell-offs in EM equity markets today, particularly in East Asia,” he said.