Gold prices remained stable in Dubai at the start of the week, following a robust surge last week. In the UAE, the 24K gold was priced at Dh292 per gram, with 22K, 21K, and 18K trading at Dh270.5, Dh261.75, and Dh224.25 per gram respectively. Internationally, gold increased by 0.10% to $2,411.02 per ounce. The metal's price surged over 2% last week due to softer US inflation data, which raised expectations for a September rate cut, and dovish remarks from US Federal Reserve Chairman Jerome Powell.
US Consumer Price Index (CPI) inflation eased from 3.3% to 3% in June, against forecasts of a drop to 3.1%. Samer Hasn, a research analyst at XS.com, noted that gold's rise is supported by growing optimism about a potential US interest rate cut following a quicker-than-anticipated slowdown in inflation. The escalation of military conflicts in the Middle East and Ukraine also aids in sustaining gold's upward momentum.
Analysts predict that gold prices will remain elevated in the coming weeks due to anticipated US rate cuts and global geopolitical tensions. "This drop in US inflation has sparked greater hope that the Federal Reserve will reduce interest rates in September. This expectation has reached its peak since the focus shifted to September as the beginning of a less restrictive monetary policy path. According to the CME FedWatch Tool, there is a 76% chance of a 25 basis point rate cut in September," explained Hasn.
Mazen Salhab, the chief market strategist for Mena at BDSwiss, added that political uncertainties in the US and Europe, along with geopolitical risks and concerns over a global economic slowdown, also bolster the bullish sentiment for gold. Furthermore, the initiation of an easing cycle by central banks and their ongoing demand for gold could further support the precious metal.
