Fri, Nov 22, 2024 | Jumada al-Awwal 20, 1446 | DXB ktweather icon0°C

UAE: Gold prices inch higher in early trade on Tuesday

Investors have been looking at the US Federal Reserve to learn more about interest rate cuts

Published: Tue 14 May 2024, 9:20 AM

Updated: Fri 24 May 2024, 10:25 AM

Top Stories

Shoppers at a jewellery store in Deira Gold Souq. KT Photo: Shihab

Shoppers at a jewellery store in Deira Gold Souq. KT Photo: Shihab

Gold prices increased in the UAE at the opening of the markets on Tuesday. The 24K variant of the yellow was trading at Dh284.0 per gram at 9 am UAE time on Tuesday compared to last night’s close of Dh283.75 per gram.

Among the other variants, 22K, 21K and 18K opened at Dh263.0, Dh254.5 and Dh218.0 per gram, respectively. Spot gold was trading at $$2,343.62 per ounce, up 0.22 per cent at 9.04 am UAE time.

Investors have been looking at the US Federal Reserve to learn more about interest rate cuts.

Stay up to date with the latest news. Follow KT on WhatsApp Channels.

“Elevated inflation expectations suggest that the Federal Reserve may continue to delay its anticipated move to lower interest rates. This is negative for gold as higher interest rates increase the opportunity cost of holding gold compared to interest-bearing assets such as bonds or cash. Several Federal Reserve officials also delivered hawkish messages last week,” said Rania Gule, market analyst at XS.com.

Atlanta Federal Reserve President Raphael Bostic stated that she does not expect it would be appropriate for the Federal Reserve to lower interest rates in 2024, citing rising inflation in the early months of the year. Neel Kashkari, President of the Minneapolis Federal Reserve, indicated a "wait-and-see" stance on future monetary policy.

Consumer morale in the United States sharply declined in May to its lowest level in six months amid stubbornly high inflation rates. On the other hand, the Israeli military stated that operations in Gaza continued overnight, with "precision operations" ongoing in eastern Rafah and near the Rafah border, as well as in the Zaytoun neighbourhood in central Gaza.

“Military escalation in Rafah before a wide-scale invasion may elevate geopolitical tensions in the Middle East, potentially boosting prices of precious metals like gold, a traditional haven asset,” she said.

“This week will be crucial for breaking the current sideways market, and market volatility will be high as gold traders monitor speeches by Jefferson and Mister from the Federal Reserve on Monday. Later in the week, the focus will shift to the U.S. Consumer Price Index (CPI), Producer Price Index (PPI), and retail sales. Stronger-than-expected economic data releases may weaken hopes for a Federal Reserve interest rate cut, exert some selling pressure on gold, support the strength of the dollar, and provide some insight into economic expectations and future inflation trajectory. Therefore, this week is deemed highly significant for the markets,” she added.

ALSO READ:



Next Story