Gold prices in Dubai reached a new record high on Tuesday afternoon, exceeding Dh305 per gram. Data from the Dubai Jewellery Group indicates that the price of 24K gold rose by Dh3 per gram to Dh305.75 per gram on Tuesday afternoon, marking an all-time high for this precious metal variant. Similarly, 22K, 21K, and 18K gold also hit record highs, trading at Dh283.25, Dh274.0, and Dh235.0 per gram, respectively.
Globally, spot gold was trading at $2,525.01 per ounce, a 0.86 percent increase, at 4.10pm, influenced by expectations of a US Federal Reserve rate cut. Mohamed Hashad, chief market strategist at Noor Capital, noted that equity markets have seen a significant rebound over the past week, with the S&P 500 and the Canadian TSX rising by over 6.5 percent and 5 percent, respectively, from their lows on August 5. This resurgence is largely attributed to a continued decline in inflation and a robust economic performance, especially in the US.
Hashad emphasized that these factors have been crucial in driving gold's surge. The metal's performance was further boosted by recent data indicating a potential slowdown in inflation, which could lead the Fed to adopt a more accommodative monetary policy. While gold has been in the spotlight, other precious metals have shown mixed performance.
Looking ahead, the upcoming Jackson Hole economic symposium, where Fed Chair Jerome Powell is set to speak, is anticipated to offer significant insights into the future direction of the central bank's monetary policy. Gold's record-breaking performance is a reflection of a combination of economic and geopolitical events, making it an attractive asset for investors seeking both returns and protection, according to Hashad.
Chris Weston, head of research at Pepperstone, commented that there is a perception that Fed Chair Jerome Powell's speech at Jackson Hole could significantly impact US rates and drive gold prices. However, Weston's base scenario is that Powell's tone will align closely with market expectations, suggesting that the US swaps and Treasury markets may not experience a shock. Therefore, investors positioned in gold anticipating a 50bp cut might consider reducing their positions.
