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Gold prices ease after 3.5-month high

Setback is partly due to renewed speculation that US Fed will increase interest rates soon

Dubai: Gold jewellery prices in Dubai have eased slightly as the bullion hit a setback following renewed speculation that the Federal Reserve in the United States would raise borrowing rates soon.

The market is also awaiting clarity on Donald Trump’s economic policy.

As of 2.38pm Tuesday, 24-karat gold was retailing at Dh151.75, down by .32 per cent from early trade on Sunday. Spot gold also traded at $1,253.93 per ounce by 0734 GMT, down from Monday’s 3.5-month high of $1,263.8, according to Reuters.

Ole Hansen, head of commodity strategy at Saxo Bank, attributed the recent price movement to the comments from Dallas Fed president Robert Kaplan, a voting member of the Federal Open Market Committee, who said that rates should be raised “sooner rather than later.”

“After another strong run higher, gold may now drift lower in search of support ahead of Trump’s budget speech,” Hansen said.

Hansen, however, pointed out that Trump’s speech is not the only factor that could impact commodity prices. He said the chance that the US Federal Reserve will adjust borrowing rates has suddenly become a coin-toss, with the market now pricing in a 50 per cent likelihood of an increase.

The latest update on inflation data is another factor to watch out for on Wednesday, as well as the upcoming elections in Europe. 

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