Gold prices in Dubai saw a significant surge on Tuesday evening, with 22K reaching an unprecedented high of Dh309.0 per gram. By 6 pm UAE time, the 24K variant of the precious metal climbed to Dh333.75 per gram, marking an increase from Dh331.75 per gram at the close of markets on Monday. Meanwhile, 22K, 21K, and 18K gold prices stood at Dh309.0, Dh299.0, and Dh256.25 per gram, respectively.
The spot price of gold also rose to $2,761.8 per ounce, reflecting a 0.69% increase at 6 pm UAE time. Dilin Wu, a research strategist at Pepperstone, noted that gold has surpassed $2,750, demonstrating resilience despite rising US Treasury yields and a slight easing of geopolitical tensions. "Remarkably, even as the ten-year real interest rate in the US has risen from 1.5% in early October to around 1.98%, gold has still experienced a substantial increase of over $150 during the same period. This departure from the traditional negative correlation between these assets signifies a notable shift in market dynamics," Wu explained.
Wu further highlighted that the current surge in gold prices appears to be driven by traders' optimistic bets on a potential Donald Trump victory, coupled with mounting concerns over the escalating US debt crisis. The fiscal situation is alarming, with the deficit reaching $1.8 trillion for the fiscal year ending in September, accounting for approximately 6% of GDP. Additionally, Wu suggested that the US Federal Reserve might be inclined to maintain low interest rates to support economic growth amidst rising debt levels. "This scenario lowers the opportunity cost of holding gold, making it increasingly attractive and contributing to its price increase," she concluded.
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