Gold prices surged by almost Dh2 per gram at the beginning of trading on Thursday, driven by a global increase of over one percent due to expectations of a US interest rate cut. According to data from the Dubai Jewellery Group, the 24K variant of gold was trading at Dh296 per gram, up from Dh293.75 at the previous close. Other variants such as 22K, 21K, and 18K opened at Dh274.0, Dh265.25, and Dh227.25 per gram, respectively.
The prices of gold have seen an increase of approximately Dh6 per gram in the last 24 hours. Analysts believe that this upward trend is likely to continue in the short term, with prices possibly reaching Dh300 per gram due to expectations of a Fed rate cut and geopolitical tensions in the Middle East. This rise could trigger profit-taking.
Globally, spot gold remained steady at $2,444.3 per ounce as of 9:10 am UAE time. The precious metal saw a significant increase on Wednesday evening after US Federal Reserve chair Jerome Powell hinted at a potential interest rate cut in September if inflation in the US stays on track. The Fed kept the Fed funds rate unchanged at its recent meeting, with the upper bound remaining at 5.50 percent.
Emirates NBD Research predicts that a rate cut from the Fed is likely to happen in September, with the possibility of two 25bps cuts before the end of the year, one in September and one in December. Although the dot plot of FOMC member projections only showed one cut in the latest summary of economic projections, the market has fully priced in a September cut. The Federal Reserve’s decision and Powell’s statements suggest that a rate reduction could occur at the upcoming meeting.
In summary, gold prices have seen a significant increase recently, driven by global factors such as US interest rate cut expectations and geopolitical tensions. The Dubai market reflected this trend, with the price per gram rising across different variants. Analysts anticipate further price increases in the short term, potentially reaching Dh300 per gram. The Federal Reserve’s decision to keep rates unchanged has set the stage for a possible rate cut in September, with market expectations pointing towards two cuts before the year ends. The precious metal’s value is likely to be influenced by these global economic factors in the coming months.
