Dubai: Gold prices set to rise briefly after the world’s largest economy, the United States, first signaled a slowdown in rate hikes, commodity analysts say. However, prices are likely to fall again thereafter, so buyers may wait to make the most of the impending rate cut.
In the United Arab Emirates, the price of 24-karat gold rose to Dh212.75 per gram on Thursday. Meanwhile, the price of 22 carat gold slipped to Dh199.75 per gram, 21 carat to Dh190.75 and 18 carat to Dh163.5 in the UAE. Check the latest gold rates here.
Analysts also assessed how disappointing global gold prices were for investors last week – which had been heading towards $1,750 in recent days. Globally, the spot price of gold was $1,755 an ounce and gold futures – indicative of short-term prices – rose 0.6% to 1,755 $.90.
Low rates make gold expensive
Lower rates tend to increase the attractiveness of bullion worldwide relative to other interest-bearing assets. High interest rates have kept gold’s traditional status as a hedge against high inflation and other uncertainties on a leash this year, as they translate into a higher opportunity cost of holding gold. non-productive asset.
Minutes from the Nov. 1-2 Fed meeting showed a “substantial majority” of U.S. policymakers agreed that it would “probably soon be appropriate” to slow the pace of interest rate hikes. Additionally, economies around the world have historically followed the rate hikes of the major economy, the United States. So markets are now pricing in an 85% chance of a 50 basis point (bp) lower hike at the December meeting, after four consecutive 75bp hikes.
“The minutes and perceived market response that a slowdown in rate hikes alongside the extreme seasonal pattern of buying from late November through December through the end of the first quarter pushed metals markets higher in Asia,” said David Mitchell, Managing Director. at Indigo Precious Metals of Singapore.
Giving an additional boost to gold and precious metals overall, the Dollar was broadly lower after the minutes. A weaker dollar makes bullion cheaper for foreign buyers. However, spot gold could end its rebound around $1,757 an ounce and resume falling thereafter, according to Reuters technical analyst Wang Tao.
– with contributions from Reuters