Dubai: After having risen 1.8 per cent in the previous session, UAE residents hoping to buy gold on the Indian occasion of Diwali or Deepawali, also known as the 'festival of lights', would be relieved in knowing prices have started to dip again.
In the UAE, the cost of 24-karat gold dipped to Dh200.75 per gram on Monday. Meanwhile, the price of 22-karat gold slipped to Dh188.75 per gram, 21-karat to Dh180 and 18-karat to Dh154.25 in the UAE. Check the latest gold rates here.
Before this weekend, gold rate in the UAE was at a year's low of Dh184.75 a gram for 22-karat. Overnight, however, international bullion prices dipped to $1,648 per ounce, and that meant the gold rate rising to Dh189.75 a gram.
"I don't think gold is out of the woods yet," said City Index analyst Matt Simpson, adding gold's move will depend on data and cues from the Fed's next meeting if it is close to pausing or will keep tightening interest rates. While the US widely expected to raise its benchmark overnight interest rate by 75 basis points at its November meeting, sentiment is building among officials to take a breather.
Gold to drop more soon?
Gold prices have fallen more than 9 per cent so far in the year amid sharp US interest rate hikes, which increases the opportunity cost of holding the asset, which yields nothing.
"If there's no US pivot and inflation continues to rip higher, we're probably looking at the $1,500-$1,600 range as we get into next year," Simpson added. This week, investors will keep a close watch on the U.S.
GDP and core inflation prints, while the European Central Bank is widely expected to raise its rates by 75 basis points.
Indicative of sentiment, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.3 per cent to 928.10 tonnes on Friday.