Dubai gold drops for a third day, 24K below Dh480 per gram

Dubai: Gold fell for a third straight session on November 12 and held below $4,000 an ounce. Stubborn US inflation and hawkish remarks from Federal Reserve officials have convinced traders that an interest-rate hike is coming next month.

In the UAE retail prices followed the global slide. 24-karat gold costs Dh479.25 a gram, down Dh3.75 from Dh483.00 yesterday. 22-karat dropped Dh3.50 to Dh443.75 from Dh447.25.

18-karat lost Dh2.75 to Dh364.75 from Dh367.50. 14-karat fell Dh2.25 to Dh284.50 from Dh286.75.

Fed hike to change the scenario

Markets now price in a quarter-point rate increase in December with full conviction. Some traders see a chance of a half-point move. Chicago Fed President Austan Goolsbee called October’s consumer inflation report “borderline disturbing”, which hardened those bets.

Bond yields reflect the shift. Two-year Treasury yields, which track near-term policy expectations, have climbed 25 basis points this week. The dollar gauge jumped almost 1 per cent across Tuesday and Wednesday.

Both moves hurt bullion. Higher borrowing costs weigh on gold because it pays no interest. A firmer dollar makes the metal costlier for most overseas buyers.

Tough trajectory ahead

Focus now shifts to when Fed governor Michael S. Barr and other central bank officials speak, later today. Traders will then watch Friday’s US Producer Price Index for further clues on the December decision.

Gold has struggled since its brief rebound above $4,100 late last month. That bounce came on the back of a drop in oil prices and a cautious recovery in equities, but was short lived.

Currently Spot gold is trading 0.82 per cent lower at $3,959.59 an ounce at 11:30 am in Dubai. It had lost more than 1 per cent in the previous session. Silver slipped 1.66 per cent to $51.14, while platinum and palladium edged higher. The Bloomberg Dollar Spot Index stayed flat