Gold prices in Dubai continued their downward trajectory on Wednesday morning, with a decrease of up to Dh0.75 per gram. According to data from the Dubai Jewellery Group, the 24K variant of the precious metal dropped to Dh315.50 per gram, a decline from Dh316.25 per gram at the close of markets on Tuesday. This week, the price of gold has fallen by Dh8 per gram. Other variants, including 22K, 21K, and 18K, also saw declines, trading at Dh292.25, Dh283, and Dh242.50 per gram, respectively.
Globally, gold was trading at $26,05.56 per ounce, down by 0.21 percent. Samer Hasn, a senior market analyst at XS.com, attributed the decline in gold prices to concerns over sustained higher interest rates, particularly with Donald Trump's return to the White House and the potential implementation of policies that could fuel inflation and business growth. This was evident in the continued rise of Treasury yields.
Hasn noted that despite the recent interest rate cut by the Federal Reserve, it did not bolster expectations for further cuts next year. The probability of a rate cut by the Fed in January is gradually decreasing, with only an 11 percent chance of a further cut in March, according to CME FedWatch Tool figures. The diminishing likelihood of rate cuts has led to a faster increase in yields on two-year Treasuries compared to 10-year Treasuries, pushing two-year yields to their highest level since July, reaching 4.33 percent.
On the positive side, the uncertainty surrounding future growth in the Chinese economy, particularly with Trump's return and his potential to escalate trade wars, could enhance gold's status as a safe haven. Hasn suggested that the ongoing contraction in house prices and the challenges faced by Chinese stocks in maintaining gains amid pessimism about economic support packages could reinforce this view. Asia remains the largest market for gold bars and coins.
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