UAE: Gold prices trade higher at the start of the week

Gold prices increased in the UAE on Monday (May 6) as investors expect the US Federal Reserve to start cutting rates later this year.

The 24K variant of the yellow metal was trading at Dh279.5 per gram on Monday morning as compared to last week’s close of Dh278.75 per gram. Among the other variants, 22K, 21K and 18K were trading at Dh258.75, Dh250.5 and Dh214.75 per gram, respectively.

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Spot gold was trading higher at $2,311.22 per ounce at 9.28 am UAE time, up by 0.76 per cent on Fed rate cut expectations and tension in the Middle East.

On Wednesday, the US Federal Reserve opted to maintain its key monetary policy rate, keeping it steady at a 22-year high.

Vijay Valecha, chief investment officer, Century Financial, said this marks the sixth consecutive time that the central bank has chosen not to make any changes, while still anticipating at least one rate cut by the end of the year.

“The Federal Open Market Committee (FOMC) had previously indicated that rates would remain unchanged within a range of 5.25 per cent to 5.5 per cent during its two-day policy meeting,” he said.

Gold and precious metal jewellery demand fell in the first quarter of this year due to prices reaching record highs due to strong buying by central banks and geopolitical tension around the world.

According to World Gold Council data, gold demand in the UAE fell 10 per cent year-on-year to 10.8 tonnes in the first quarter of this year. This was the lowest demand in the past 9 months.

Jewellery demand fell 10 per cent year-on-year during January-March 2024 to 8.8 tonnes. While demand quarter-on-quarter fell by 1.5 tonnes. Similarly, bars and coins demand fell the same percentage – 10 per cent – in the first quarter to 2.0 tonnes in the UAE.