UAE: Gold prices drop in early trade

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The UAE gold prices lost some gains made on Wednesday morning that were achieved on the previous day.

The 24K variant of the precious metal fell Dh1 per gram to Dh263.75 on Wednesday morning as against Dh264.75 at the close of the markets on Tuesday. The yellow metal gained Dh1.75 per gram on Tuesday.

Among the other variants, the 22K opened lower at Dh244.25, 21K at Dh236.5 and 18K at Dh202.75 per gram.

Globally, the spot gold was down 0.10 per cent at $$2,177.27 per ounce at 9.47 am UAE time as investors stayed on the sidelines awaiting for more cues on the US Federal Reserve policy.

Rania Gule, market analyst at XS.com, said the price of gold rose above its highest level in two days on Tuesday, nearing $2,190, coinciding with a downward correction in the US dollar.

“Investors are now seeking new signals regarding inflation expectations to gauge when the Fed will begin to cut interest rates. The market will closely focus on the release of the US Personal Consumption Expenditures (PCE) Price Index for February, which will be published on Friday, coinciding with official holidays in the US and Europe, extending market pricing for this data until the beginning of next week, coinciding with the monthly market opening,” said Gule.

She added that any signs of monetary policy easing could strengthen gold prices as it would diminish hopes for the Fed to keep rates high for longer.

“However, stubborn inflation data may negatively impact gold prices as it increases the opportunity cost of investing in gold. Instead, investors may opt for interest-bearing assets like bonds, which would become more attractive due to rising yields,” added Gule.