UAE: Gold prices continue to rise, reach new record high

The precious metal's meteoric rise is driven by expectations of a Fed rate cut, a weakening dollar, and geopolitical tensions

Waheed Abbas

Published: Mon 16 Sep 2024, 9:34 AM

Gold price rally continued on the first trading day of the week in Dubai, reaching an all-time high of Dh313 per gram at the opening of the markets on Monday.

The 24K variant of the yellow metal opened Dh0.75 per gram higher at Dh313.0 per gram compared to Dh312.25 at the close of the markets over the weekend.

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Among the other variants, 22K, 21K and 18K opened higher at Dh290.0, Dh280.5 and Dh240.5 per gram, respectively. Globally, gold was trading at $2,586.23 per ounce, up 0.28 per cent at 9.10 am UAE time.

The precious metal has been on a meteoric rise, reaching unprecedented heights. This surge is primarily driven by several factors, including expectations of a Federal Reserve interest rate cut, a weakening US dollar, and geopolitical tensions.

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Mohamed Hashad, chief market strategist at Noor Capital, said the price of gold hit another record high as investors became increasingly optimistic about the future decline in global interest rates. As a safe-haven asset, gold prices often move in the opposite direction of interest rates.

This week's main international economic event is the US Federal Reserve’s policy meeting.

“Most traders believe the Fed would proceed cautiously when it reduces rates for the first time since the pandemic’s inception, according to the fed funds futures market,” he said.

Hashad added: “The anticipation of a rate cut has been a significant catalyst for gold prices. As the Federal Reserve signals a potential easing of monetary policy, investors often turn to gold as a safe-haven asset. Lower interest rates typically reduce the opportunity cost of holding gold, which does not generate interest income. Moreover, a rate cut can weaken the US dollar, making gold more attractive to foreign buyers.”

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