Dubai gold prices drop further; lose Dh8 per gram so far this week

The yellow metal's decline comes amid concerns about the higher-for-longer interest rates with Donald Trump’s return to the White House, says expert

Waheed Abbas

Published: Wed 13 Nov 2024, 10:10 AM

Last updated: Wed 13 Nov 2024, 10:11 AM

Gold prices continued their downward trend in Dubai on Wednesday morning, losing up to Dh0.75 per gram. The Dubai Jewellery Group data showed the 24K variant of the yellow metal fall to Dh315.50 per gram, down from Dh316.25 per gram at the close of the markets on Tuesday. The precious metal price has dropped Dh8 per gram so far this week.

Among the other variants, 22K, 21K and 18K dipped to Dh292.25, Dh283 and Dh242.50 per gram, respectively.

Globally, gold was trading at $26,05.56 per ounce, down 0.21 per cent.

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Samer Hasn, senior market Analyst at XS.com, said gold’s decline comes amid concerns about the higher-for-longer interest rates with Donald Trump’s return to the White House and the implementation of policies that might fuel inflation and business growth, which was reflected in the continued rise in Treasury yields.

“Despite the recent interest rate cut by the Federal Reserve last week, it did not provide a boost to sentiment regarding the continuation of the cuts into next year. We are witnessing a gradual decline in the probability of the Fed cutting rates next January,” he said, adding that if the Fed cut rates in January, the probability of further a cut in March is only 11 per cent, after exceeding 60 per cent a month ago, according to CME FedWatch Tool figures.

The diminishing likelihood of a rate cut next year has driven yields on two -year Treasuries — highly sensitive to shifts in short-term interest rates and expectations—up at a faster pace than 10-year Treasuries. This surge has propelled two-year yields to their highest level since July, reaching 4.33 per cent today.

On the other hand, on the upside, the uncertainty over future growth that may cloud the Chinese economy with the return of Trump and his tendency to exacerbate trade wars may enhance gold’s status as the most prominent safe haven in China. “The continued contraction in house prices and the difficulty that Chinese stocks are facing in holding their gains amid pessimism about the effectiveness of economic support packages may reinforce this hypothesis. While Asia accounts for the largest share of global demand for gold bars and coins,” said Hasn.

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