Gold prices in Dubai continued their downward trend on Wednesday, aligning with global markets ahead of an expected interest rate cut by the US Federal Reserve.
At the market’s opening at 9 a.m., the 24K gold variant was priced at Dh311 per gram, down by Dh0.75 from the previous evening’s close. Other popular gold variants, including 22K, 21K, and 18K, also saw declines, trading at Dh288, Dh278.75, and Dh239 per gram, respectively.
This marks the second consecutive day of declining gold prices after the precious metal hit an all-time high on Monday, when 24K gold reached Dh313.5 per gram. Since that peak, gold has lost Dh2.5 per gram, reflecting a broader global dip.
Globally, spot gold was trading at $2,568.49 per ounce, down 0.21% by 9:10 a.m.
Market analysts attribute this drop to investor anticipation of the US Federal Reserve’s policy announcement later in the day. Marc Pussard, head of risk at APM Capital, noted that gold prices surged to record highs earlier this week as a weaker US dollar and the expectation of aggressive monetary easing by the Fed bolstered the appeal of non-yielding assets like gold.
However, as the Fed prepares to announce its next move, the market is seeing a period of consolidation. Chris Weston, head of research at Pepperstone, explained that gold traders are waiting for signals that could drive further buying. “Those positioned for a break of $2,600 per ounce need to hear a message that inspires new buying of gold,” he said, adding that it is unclear what that message might be.
Weston noted that a larger-than-expected 50-basis-point cut could support gold prices by pushing down Treasury yields. However, if US equity markets decline sharply, gold could be caught up in a broader sell-off of risky assets. On the other hand, a 25-basis-point cut might not significantly impact gold, provided the Fed signals that it is open to more aggressive action in future meetings if necessary.
As the Federal Reserve’s decision looms, traders and investors in Dubai and globally are keeping a close eye on market movements, waiting to see how gold prices will react to the anticipated shift in US monetary policy.