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UAE: Gold prices drop after Opec+ announces surprise oil output cuts

Precious metal is now vulnerable to move down to $1,900

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By A Staff Reporter

Published: Mon 3 Apr 2023, 10:09 AM

Last updated: Mon 3 Apr 2023, 10:15 AM

Gold prices slid on Monday morning after a surprise announcement from Opec+ about a cut to oil output sparked inflation concerns and raised bets of an interest rate hike at the US Federal Reserve's upcoming May meeting.

Spot gold was down 0.25 per cent at $1,953.18 per ounce as of 9.50am UAE time.

In the UAE, the 24K gold was trading at Dh236.5 per gram on the first trading day of the week. While 22K, 21K and 18K opened at Dh219.0, Dh212.0 and Dh181.75 per gram, respectively.

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The opportunity cost of holding non-yielding bullion rises when interest rates are increased to lower inflation.

Gold has fallen "as investors weigh up the lure of gold as a safe-haven asset, versus the potential for higher-for-longer interest rates. Clearly, fears of inflation and higher interest rates has won the argument," said Matt Simpson, senior market analyst at City Index.

"Gold is now vulnerable to move down to $1,900, given the potential for a higher terminal Fed rate that markets are currently pricing in," Simpson added.

ANZ, in a note, observed gold's "safe haven demand easing as the US banking turmoil eased."

-waheedabbas@khaleejtimes.com

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A Staff Reporter

Published: Mon 3 Apr 2023, 10:09 AM

Last updated: Mon 3 Apr 2023, 10:15 AM

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