Dubai: Gold prices are expected to briefly rise even further after seeing their biggest jump in two weeks in the previous session, commodity analysts evaluate. However, prices are expected to drop again thereafter, which is why buyers may look to wait before making the most of the looming lower rates.
In the UAE, the cost of 24-karat gold rose to Dh214.75 per gram on Thursday. Meanwhile, the price of 22-karat gold slipped to Dh201.75 per gram, 21-karat to Dh192.5 and 18-karat to Dh165 in the UAE. Check the latest gold rates here.
Analysts also evaluated how gold prices worldwide have been disappointing for buyers these past few weeks - which was edging towards $1,780. Globally, spot gold price was at $1,769 per ounce, and gold futures - indicative of near-term prices - advanced to $1,781.2.
Low rates make gold costly
Gold was little changed on Tuesday, as the dollar steadied after seeing its biggest jump in two weeks in the previous session, while worries about bigger rate hikes by the US Federal Reserve lingered.
Lower rates tend to lift the appeal for bullion worldwide in comparison with other interest-bearing assets. High interest rates have kept a leash on gold's traditional status as a hedge against high inflation and other uncertainties this year as they translate into higher opportunity cost to hold the non-yielding asset.
"Gold prices have been tracking the dollar moves closely," said IG Market strategist Yeap Jun Rong. "With market trying to seek clarity on Fed's rate hike plan, rate expectations have been sensitive to incoming economic data. Signs of stronger-than-expected demand may lead markets to revisit more hawkish expectations."
Bullion dropped from a five-month high to close 1.6 per cent lower as the dollar rebounded after the data prompted speculation the Fed may lift rates more than recently projected. Spot gold may bounce to $1,783 per ounce, before resuming its fall towards $1,766, Reuters technical analyst Wang Tao said.
- with inputs from Reuters