Gold prices in Dubai experienced a slight decrease from their record highs, but opened higher on Thursday morning.
In the UAE, the price of 24K gold was Dh298.5 per gram at 9am on Thursday, up from Dh297.25 per gram at Wednesday’s market close. The precious metal had reached a record high of Dh300.50 per gram on Wednesday evening before settling lower. Other gold variants such as 22K, 21K, and 18K were trading at Dh276.25, Dh267.50, and Dh229.25 per gram, respectively.
On the global front, spot gold was trading at $2,467.04 per ounce, marking a 0.23 per cent increase. In the previous session, prices had touched $2,482 per ounce.
The surge in gold prices is largely attributed to the anticipation of the US Federal Reserve cutting interest rates in September following the latest inflation data. Edward Bell, head of market economics at Emirates NBD Research, explained, “In July, as rate cut expectations have increased, gold prices have rallied by $140 per troy ounce, or about 6 per cent. However, most of the year’s gains in gold occurred during Q1 and early Q2 when rate cut expectations were actually declining. Higher than expected inflation estimates for the US economy in Q1 led investors to adjust their rate cut expectations lower. During that period, gold prices rose by nearly $330 per troy ounce, or roughly 16 per cent.”
Bell noted that over the medium and longer term, factors such as consumer sentiment, equity market performance, and the US dollar have a more significant impact on gold prices. He added, “As gold is the near ultimate sentiment investment (it pays no dividend or yield and has limited commercial application), it appears to benefit from periods of deteriorating consumer and investor optimism. Gold has trended higher when the University of Michigan’s consumer sentiment survey has deteriorated: the global financial crisis and pandemic appear to highlight this relationship.”
