Gold prices in the UAE took a breather on Tuesday after a strong rally on Monday. The price drop comes amid positive signs on US inflation, which could impact the Federal Reserve’s monetary policy decisions.
At the opening of the markets on Tuesday, the price of 24K gold, a popular choice in the UAE, was Dh292.25 per gram, down from Dh293.0 per gram the previous day. This translates to a decrease of Dh0.75 per gram. Other gold varieties like 22K, 21K, and 18K also saw similar drops.
The price dip reflects a global trend. As of Tuesday morning UAE time, gold was trading at $2,414.41 per ounce internationally, down 0.5% compared to Monday.
Analysts believe this shift might be connected to recent US inflation data. Positive economic indicators have sparked speculation that the US Federal Reserve may ease its monetary tightening plans sooner than expected. This, in turn, could affect the price of gold, which is often seen as a safe haven investment during economic uncertainty.
Experts like Diego Colman, a strategist at dailyFX, point to this data as a reason for the recent gold price rise. He suggests the possibility of the Federal Reserve adjusting its policies could be boosting the value of precious metals, with gold nearing its all-time high.
However, some analysts, like those at Julius Baer, believe the gold price rally might be taking a pause. They suggest that central banks might be shifting their focus from US Treasuries to gold, contributing to the recent price surge. However, they caution that this rapid increase may not be sustainable.
