Gold prices drop half a dirham in early trade in Dubai

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Gold prices slipped in the UAE on Tuesday morning after precious metal prices fell globally, weighed down by the prospects of the US reaching the debt ceiling deal and strengthening of the dollar.

According to Dubai Jewellery Group data, the 24K was trading at Dh234.75 per gram at the opening of the markets on Tuesday morning, down half a dirham from last night’s close. Similarly, 22K, 21K and 18K variants of the yellow metal were trading at Dh217.5, Dh210.5 and Dh180.5 per gram, respectively.

Globally, the spot gold price was down at $1,935.8 per ounce, down by 0.31 per cent, at 9.37 am UAE time.

Ipek Ozkardeskaya, senior analyst, Swissquote Bank, said the strong dollar continues weighing on gold appetite.

US President Joe Biden said on Monday he feels good about prospects for passage by Congress of the debt ceiling deal that he reached with House of Representatives Speaker Kevin McCarthy.

High volatility events such as the US regional banking crisis, and whether or not an agreement would be reached on raising the US debt ceiling are now passing, "reducing the market's interest in gold as investors seek alpha," Michael Langford, director at corporate advisory AirGuide said.

Fed officials on the other hand have in recent days turned up the heat, with a hawkish outlook on interest rates – and that has to some extent also offset safe-haven flows around the US debt ceiling situation as higher interest rates dull the appeal for zero-yield bullion.

Having navigated the financial crisis of 2008, Minneapolis Fed President Neel Kashkari worries about systemic risks. But now, as a US monetary policymaker, he worries even more about inflation.

"If later in the year a more dovish approach is taken, this then implies some level of easing of interest rates may occur, which will be seen as bullish for equities and also reduce the desire for investors to hold gold versus other more risk-on-asset classes," Langford added.