Gold prices experienced a decline of nearly Dh2 per gram at the opening of markets in Dubai on the first trading day, with 22K falling below Dh300 per gram. By 9am UAE time, the 24K variant dropped Dh1.75 per gram to Dh323.5 per gram in Dubai, a decrease from Dh325.25 at the close of markets over the weekend. Among other variants, 22K, 21K, and 18K prices fell to Dh301.25, Dh291.5, and Dh250.0 per gram, respectively. Spot gold was trading lower at $2,673.44 per ounce, down by 0.43 per cent at 9.08 am UAE time.
The decline in gold prices followed Donald Trump's victory in the US election, which led to a strengthening of the US dollar. Conversely, gold prices had strengthened after the US Federal Reserve raised rates last week. Mohamed Hashad, chief market strategist at Noor Capital, noted that gold prices surged over 1.7 per cent following the Federal Reserve's widely anticipated 25 basis point interest rate cut. "While the market had largely priced in this move, the Fed’s acknowledgment of economic uncertainty and balanced risks enhanced gold’s appeal as a safe-haven asset," he explained.
Hashad further added that a break above $2,700 could target the 20-day simple moving average (SMA) at $2,716 and potentially reach $2,750. Conversely, a decline below the November 6 low of $2,652 could result in further losses towards the 50-day SMA at $2,639 and the October 10 low of $2,603. "The Federal Reserve’s monetary policy decisions significantly influence gold prices. Lower interest rates generally weaken the US dollar and increase demand for gold as an inflation hedge and safe-haven asset. In contrast, higher interest rates tend to strengthen the dollar and diminish gold’s appeal," he concluded.
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