Gold prices in Dubai fell by Dh5 per gram in early trade on Friday, with 24K trading at Dh293.50 per gram and other variants like 22K, 21K, and 18K also experiencing a decline. The drop came after gold prices had crossed Dh300 per gram earlier in the week on expectations of the US Federal Reserve cutting interest rates in September. Globally, spot gold was trading at $2,415.05 per ounce, down 1.1% due to profit-taking.
Kelvin Wong, a senior market analyst, stated that the yellow metal saw profit-taking after a recent rally, with a positive outlook expected in the medium term due to political uncertainty and rate cuts. Analysts believe that prices will recover in the coming weeks and months on expectations of Fed rate cuts and global uncertainties. Antonio Ernesto Di Giacomo, a market analyst, highlighted that gold prices reached historic highs on July 17 due to optimism surrounding a potential interest rate cut.
Investors have been closely monitoring economic indicators signaling a cooling of the US economy and the possibility of an interest rate cut to stimulate growth and control inflation, which has driven demand for gold as a safe haven asset. The Federal Reserve is expected to make a 25-basis-point cut in September, with over a 90% probability according to the CME Fedwatch. This high probability has been a significant catalyst for the rise in gold prices as investors believe a lower interest rate environment will boost demand for precious metals.
With confidence in an imminent rate cut, investors are seeking refuge in gold, pushing its price to record levels. Antonio emphasized that with a high likelihood of a rate cut in September, gold demand is expected to remain strong, solidifying its position as a safe asset in times of economic uncertainty. Overall, the recent decline in gold prices in Dubai is a result of profit-taking after a rally and market expectations of a rate cut by the US Federal Reserve. However, the medium-term outlook for gold remains positive due to political uncertainty and expectations of rate cuts, making it a sought-after investment in times of economic ambiguity.
