Stable Dollar and Fed Rate Speculation Weigh on Precious Metal Prices
Gold prices in the UAE fell further on Friday, marking a Dh2 per gram decrease since Thursday morning, as global market forces weighed on the value of the precious metal. Spot gold was trading at $2,729.68 per ounce on Friday evening, reflecting a 0.17% decline.
In the UAE, the 24K variant dropped to Dh329.25 per gram from its Dh331.25 per gram level on Thursday morning. Prices of other gold variants experienced similar declines, with 22K falling to Dh304.75, 21K to Dh295, and 18K to Dh253 per gram.
Bas Kooijman, CEO and asset manager of DHF Capital, attributed the decline to profit-taking among investors, with the dollar stabilizing and the yield on the 10-year U.S. Treasury Note hovering around 4.2%. “The attraction of stable yields has, to a certain extent, drawn investors away from gold,” Kooijman noted, adding that speculation on the U.S. Federal Reserve’s rate-cutting cycle has become less aggressive than previously anticipated. This cautious outlook on rate cuts could continue to impact gold’s appeal, potentially dampening its upward momentum in the near term.
“We see solid support for gold around the $2,714 level,” Kooijman remarked, “and anticipate that it will maintain upward momentum as long as this price point holds.” He explained that next week, market focus will shift to U.S. economic data, with investors keeping a close watch on indicators that may influence the Federal Reserve’s rate decision. This data could introduce further volatility to the gold market.
Despite the short-term fluctuations, gold’s long-term appeal remains strong, bolstered by geopolitical tensions in the Middle East and mounting concerns over a potential broader conflict. Kooijman highlighted gold’s continued role as a safe-haven asset amidst uncertainty surrounding the upcoming U.S. election and the possibility of a Trump victory. He noted that anticipated easing by major central banks worldwide also contributes to sustained demand for gold.
As global and regional factors play out, gold’s price may continue to see some turbulence, but investors’ trust in the precious metal remains largely intact due to its historical resilience in times of political and economic uncertainty.
