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Gold prices drop in Dubai after yellow metal plunged 1% globally last night

The yellow metal fell one per cent on Wednesday night as the US consumer price index increased 0.2 per cent

Gold prices fell in Dubai at the opening of the markets on Thursday as precious metal fell 1 per cent globally on Wednesday night after data showed US consumer prices rebounded in July.

At 9am UAE time, the 24K variant of the yellow opened half-a-dirham lower at Dh297 per gram, while 22K, 21K and 18K were trading lower at Dh275.0, Dh266.25 and Dh228.25 per gram, respectively.

Globally, spot gold was trading at $2,453.67 per ounce, up 0.17 per cent.

The yellow metal fell one per cent on Wednesday night as the US consumer price index increased 0.2 per cent, dumping hopes for a sizeable rate cut from the US Federal Reserve next month.

Ruben Ferreira, head of Portuguese operations at FlowCommunity, said gold prices remained near their peak and could benefit from a weaker dollar and sliding treasury yields.

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“Geopolitical risks in the Middle East and Eastern Europe could continue to support demand for the precious metal. Increased uncertainty might drive demand for gold as a safe-haven asset if tensions escalate into broader conflicts,” said Ferreira.

Michael Brown, senior research strategist at Pepperstone, said the July US CPI report further helps to cement a September Fed cut, though after July's softer-than-expected jobs data, it is the labour market, not inflation, that is likely to determine both the magnitude of such a move, as well as the scale, and speed, of further steps towards normalising policy.

Headline prices rose a cooler-than-expected 2.9 per cent, the slowest annual rate of increase since March 2021, while core CPI rose 3.2 per cent, the slowest pace since April of the same year. On a month-on-month basis, both headline and core prices rose 0.2 per cent MoM, bang in line with expectations, albeit causing a marginally hawkish cross-asset reaction, presumably a result of dovish pre-CPI positioning after the cool PPI figures yesterday.

“It seems rather unlikely that the inflation figures will materially alter the policy outlook, though the data does likely help to provide officials with further confidence in the disinflationary process, as price pressures continue to recede towards the 2 per cent target. A September cut had already been strongly hinted at by Chair Powell in the July press conference and became an effective certainty after the July jobs report. Though market participants continue to engage in a tug-of-war over whether said cut will be 25bp or 50bp, a more modest 25bp move seems a reasonable first step on the road to normalising policy, with a larger cut likely to smack of panic at this juncture,” he said.

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