On the first trading day of the week, gold prices in Dubai held steady following a strong rally last week. In the UAE, the 24K variant 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 rose by 0.10 percent to $2,411.02 per ounce. The yellow metal surged over two percent last week due to soft inflation data in the US, which bolstered hopes of a rate cut in September. Additionally, dovish comments from US Federal Reserve Chairman Jerome Powell contributed to the rally. The US Consumer Price Index (CPI) inflation slowed from 3.3 percent to 3 percent in June, compared to expectations of a decline to 3.1 percent.
Samer Hasn, a research analyst at XS.com, explained that gold’s recent gains are due to increased optimism about the potential for US interest rate cuts following a faster-than-expected slowdown in inflation. “The escalation of military actions in the Middle East and Ukraine also supports the yellow metal in maintaining its gains,” he added.
Analysts anticipate that gold prices will remain elevated in the coming weeks due to expectations of US rate cuts and ongoing geopolitical tensions worldwide.
“This decline in US inflation has fueled hopes that the Federal Reserve will cut interest rates in September. This hope has reached its highest level since attention was drawn to this month as the starting point for a less restrictive monetary policy path. The probability of the Fed cutting rates by 25 basis points is over 76 percent in September, according to the CME FedWatch Tool,” Hasn noted.
Mazen Salhab, chief market strategist for MENA at BDSwiss, highlighted that political uncertainty in the US and Europe, along with geopolitical risks and concerns about a global economic slowdown, are contributing 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,” Salhab said.
