Gold prices in Dubai edged higher at the market open on Thursday as investors awaited key US inflation data that could influence expectations for the Federal Reserve’s next interest-rate decision.
The 24K variant was trading at Dh531.25 per gram at the market open on Thursday, while 22K, 21K, 18K and 14K opened at Dh492, Dh471.75, Dh404.25 and Dh315.50 per gram, respectively.
Globally, the spot gold price fell 0.13 per cent to $4,409.2 per ounce as of 9:05am UAE time. Silver was down 0.81 per cent, trading at $67.52 per ounce.
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Ole Hansen, Head of Commodity Strategy at Saxo Bank, said gold traders are currently weighing several competing market themes, keeping prices largely rangebound around $4,400 an ounce.
He said rising expectations of a US rate hike and higher bond yields have been a key headwind for gold, as higher yields increase the opportunity cost of holding the non-yielding asset. However, a weaker US dollar, resilient investment demand through exchange-traded funds and futures, and continued geopolitical uncertainty have helped limit the downside.
“Gold traders – and the algorithmic programmes that account for a significant share of day-to-day activity – are currently struggling to determine which of several competing themes will ultimately set the tone, overall keeping prices rangebound around $4,400,” Hansen said.
The Bloomberg Dollar Index has fallen 1.25 per cent over the past month, with strength in Asian currencies, particularly the Korean won, Japanese yen and Australian dollar, weighing on the greenback, he said.
Hansen said this week’s US consumer and producer price data could prove important in determining the direction of gold ahead of the Federal Reserve’s September meeting.
“A hotter inflation print would likely reinforce rate-hike expectations and keep yields elevated, while softer data could quickly unwind some of the recent hawkish repricing,” he said.
Source: Khaleej Times