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UAE: Gold prices jump nearly Dh2 per gram in early trade

Precious metal was trading at $2,340.74 per ounce as investors bet on the US Federal Reserve cut

Published: Thu 20 Jun 2024, 9:58 AM

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Visitors look at gold ornaments displayed in a jewellery shop. Photo: AFP

Visitors look at gold ornaments displayed in a jewellery shop. Photo: AFP

Gold prices continued their upward trend in UAE, rising by nearly Dh2 per gram at the opening of the markets on Thursday.

In the UAE, the 24K variant of the yellow metal was trading at Dh283.5 per gram at the opening of the markets as compared to last night’s close of Dh281.75, up Dh1.75 per gram. Among the other variants, 22K, 21K and 18K also opened higher at Dh262.5, Dh254.0 and Dh217.75 per gram, respectively.

Globally, gold was trading at $2,340.74 per ounce, up 0.48 per cent, hitting a one-week high as investors bet on the US Federal Reserve cut.

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Ole Hansen, head of commodities strategy at Saxo Bank, said China, a major driver of the gold rally since 2022, is nowhere done buying gold. “We believe the pause is mostly driven by the bank baulking at the prospect of paying record prices. Also, the recent attention paid to Chinese private buying, another significant driver of demand for physical gold, has likely thrust them into a spotlight they normally avoid. Gold is still consolidating, and the news will likely prolong that phase, but overall, the long-term bullish outlook has not changed,” he said.

Besides the strong demand from central banks and retail investors in China, Hansen added that the bulk of the price run-up back in February and March was supported by strong demand from managed money traders, such as hedge funds. “Having joined the rally early, they have not been forced to adjust (sell) positions as the current correction phase has kept prices above levels that otherwise would have forced them to reduce their exposure.”

Saxo Bank maintained its positive outlook for investment metals on the back of geopolitical risks and events’; strong retail demand in China amid the desire to park money in a sector seen as relatively immune to a struggling economy and property woes; continued central bank demand amid geopolitical uncertainty and de-dollarisation; and the focus changing from the negative impact of the lower rate cut expectations towards support from a sticky inflation outlook.

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