Dubai: Gold prices drop ahead of Diwali festival
Gold prices fell at the opening of the market in Dubai on Thursday and this is an extension of the drop seen on Wednesday night during the last session.
Over the past few months, gold prices have been on an upward trend and new records have been established as market expectations of a cut in interest rates by the US Federal Reserve, geopolitical tensions in the Middle East, and increased Chinese purchasing have all provided support.
The decrease in prices on Wednesday late into Thursday morning is good news for shoppers in Dubai ahead of the Indian festival Diwali celebrations next week. For many Indians, this is the time when gold and precious metal jewelry are purchased as they deem it lucky.
As of Thursday morning at 9 AM UAE time, the price of 24K gold dropped slightly to Dh331.25 on the gram from Dh331.50 per gram which was the closing price the previous night. On Wednesday morning the price reached an all-time high of Dh333 per gram.
The other ones which are, 22K, 21K and 18K tumbled to Dh305.75, Dh296 and Dh253.75 per gram correspondingly.
Spot Gold was trading at 2727.32 an ounce in the morning of 9:20 am UAE time and this was a rise of 0.22 percent. However, this is lower than the price of $2750 per ounce which it was trading at in the early hours of trade on Wednesday.
According to Vijay Valecha, CIO of Century Financial, as investors in safe-haven assets, there is an increase in the demand for Western assets as ceasefire in various regions in the Middle East leads to them and uncertainty surrounding the growth and impact of the upcoming US presidential elections is contributing to more demand for Gold which has breached all time high for a third time this month.
“The rise in ‘safe-haven’ market traditionally used the dollar also come at an attraction of more than two month as US Treasury yielding high dividends. Maintaining the trends of previous months average, strong employment data in the USA eclipsed the risk of waiting awhile longer for inflation to settle to the target rate of 2% set by the US Feds. With that information in existence, the probability of rate cutting falls. People are looking forward to Thursday’s release of the PMI and jobless claims in the USA,” according to Valecha.
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