Gold prices in Dubai saw a decline on Monday, offering a brief respite for local shoppers as the precious metal faced downward pressure from shifting global expectations regarding US interest rates. The 24K gold rate dropped to Dh533 per gram from its previous close of Dh536.75, while the 22K rate fell to Dh493.75 from Dh497.
This market movement follows remarks from Federal Reserve Chairman Kevin Warsh, who indicated that policymakers still have “work to do” to bring inflation back to the central bank’s 2 per cent target. The prospect of a more hawkish stance has prompted traders to adjust their positions, as gold—which generates no interest or dividends—typically becomes less attractive to investors when bond yields and interest rates rise.
Market data from the CME FedWatch tool shows that the probability of a September rate hike has climbed to 58 per cent, up from 36 per cent prior to Warsh’s comments. Expectations for a December increase have similarly risen to 89 per cent. Independent analyst Tai Wong noted that the metal is “getting slapped hard as Chair Warsh affirms that inflation isn’t meaningfully slowing and the Fed has ‘work to do.’”
Vijay Valecha, Chief Investment Officer at Century Financial, observed that gold had dipped below $4,600 an ounce ahead of the speech, partially due to profit-taking after the metal reached a three-month high earlier in the week. Despite this, Valecha noted that the broader outlook remains supported by robust investment flows, central-bank accumulation, and ongoing concerns regarding US fiscal sustainability.
While gold retreated from a recent peak near $4,696, it remains above the critical $4,369 breakout support level. Valecha identified the $4,650 to $4,700 range as the immediate resistance zone, with $4,550 serving as the primary intraday support. A failure to hold that level could potentially push prices toward $4,500.
The impact of these global trends extended to other markets, including India, where 24K gold fell to ₹156,760 per 10 grams from ₹158,240, and 22K gold dropped to ₹143,700 from ₹145,050. Additionally, gold discounts in India plunged this week as demand softened amid speculation that the government might reverse recent import duty increases.
Despite the current volatility, gold experienced a significant surge in August, gaining more than 13 per cent. This performance marked its strongest monthly showing since January and one of the largest gains recorded this century. Nicky Shiels, head of research and metals strategy at MKS PAMP, characterized the current market environment as a “tug of war,” suggesting that the “debasement trade” could persist into September and continue to provide a floor for gold prices.
The market remains caught between conflicting signals, with some analysts pointing to a more dovish stance from the US Treasury contrasting with the Federal Reserve’s hawkish tone. As the US dollar strengthens to a more than one-week high, investors continue to monitor these developments closely to gauge the future trajectory of bullion. The report also notes that also Read: Dubai gold prices rise again: What it means for UAE shoppers today. The report also notes that he said investors were also weighing the outlook for US monetary policy as policymakers remained divided over the appropriate path for interest rates. The report also notes that the 24K rate fell to ₹156,760 per 10 grams, from ₹158,240, a decline of ₹1,480 per 10 grams. The report also notes that the 22K rate dropped to ₹143,700 per 10 grams, from ₹145,050, down ₹1,350. The report also notes that the latest decline comes after a strong run for gold. The report also notes that continued central-bank purchases and concerns over US fiscal sustainability, gold’s longer-term support has come from renewed demand for physically backed gold exchange-traded funds.
Source: Gulf News
