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Gold prices were steady in Dubai in early trade on the first trading day of the week after a strong rally last week.
In the UAE, the 24K variant of the yellow metal was trading at Dh292 per gram while 22K, 21K and 18K were trading at Dh270.5, Dh261.75 and Dh224.25 per gram, respectively.
Globally, gold was up 0.10 per cent at $2,411.02 per ounce. The yellow metal rallied over two per cent last due to soft inflation data in the US bolstering hopes of a rate cut in September and dovish comments from the US Federal Reserve chairman Jerome Powell.
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Consumer Price Index (CPI) inflation in the US slowed from 3.3 per cent to 3 per cent in June, versus expectations for it to decline to 3.1 per cent.
Samer Hasn, research analyst at XS.com, said gold’s gains come amid more optimism about the possibility of cutting interest rates in the US after a faster-than-expected slowdown in inflation. The escalation of military actions in the Middle East and Ukraine comes to provide support for the yellow metal to maintain its gains.
Analysts expect the yellow metal prices will stay on the higher side in the coming weeks due to US rate cut expectations and geopolitical tensions around the world.
“This decline in (US) inflation has led to more hope that the Federal Reserve will cut interest rates next September. This hope has reached the highest levels since attention was drawn to this month as the starting point towards a less tightening path for monetary policy. The probability that the Fed will cut rates by 25 basis points is more than 76 per cent in September, according to the CME FedWatch Tool,” said Hasn
Mazen Salhab, chief market strategist for Mena at BDSwiss, said political uncertainty in the US and Europe, along with geopolitical risks and concerns about a global economic slowdown, also contribute to the bullish outlook for gold. Additionally, the start of an easing cycle by central banks and their continuous demand for gold may further support the precious metal.
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