Gold prices in Dubai soared to an unprecedented high on Wednesday evening, surpassing Dh300 per gram. According to data from the Dubai Jewellery Group, 24K was sold for Dh300.50 per gram towards the end of the evening. Meanwhile, 22K, 21K, and 18K were priced at Dh278.25, Dh269.25, and Dh230.75 per gram, respectively.
Internationally, spot gold was trading at $2,461.9 per ounce at 8pm UAE time, having earlier reached $2,482 per ounce. Edward Bell, head of market economics at Emirates NBD Research, noted that gold prices have surged by nearly 20% year-to-date, marking one of the most significant gains among commodities, with silver, its more volatile counterpart, experiencing even stronger movements. Bell attributed the current surge in gold prices to expectations that the US Federal Reserve will begin to reduce rates significantly before the end of 2024.
At the beginning of July, Fed funds futures indicated less than two 25bps cuts by the end of 2024, but by July 17th, this had increased to nearly two and a half cuts fully priced before the year's end, according to Bell. He explained that the conventional relationship between gold and interest rates is that as rates decrease and yields on US Treasuries and other fixed-income instruments decline, gold becomes more appealing. However, while the rise in gold prices in July might have been triggered by rate expectations, their impact on gold prices diminishes in the medium and long term, Bell added.
