Gold prices eased on Monday as traders awaited December US inflation data that could stress the need for earlier-than-anticipated interest rate hikes by the world's top central bank, a move tracked by economies elsewhere.
Spot gold was down 0.2 per cent at $1,792.22 (Dh6,583.24) per ounce, as of 0455 GMT, after hitting its lowest level since December 16 of $1,782.10 on Friday. US gold futures fell 0.3 per cent to $1,791.30. However, prices started to rebound gradually.
In the UAE, 24-karat gold price is likely to trade at around Dh215 in the days ahead. Gold prices in the Emirates, which fell over Dh4 per gram on Thursday last week, has been steading itself at those levels since, making it an ideal time to 'buy the dip' in prices. These levels are not seen lasting as prices are seen rising in the month ahead.
The price of 24-karat gold in the UAE was at Dh217 per gram on Monday, down from previous day’s close of about Dh218 and Dh2 short of Dh219 seen a week earlier. The price of 22-karat was at Dh204.0, 21-karat at Dh194 and 18-karat at Dh166.75. To monitor gold prices in the UAE, click here.
"Gold was trading mixed on the first day of the week after posting its worst weekly loss since November. The metal rebounded from the lows of $1,782 on Friday, and remains trapped below $1,800," said Vijay Valecha, chief investment officer at Dubai-based investment brokerage Century Financial.
"Price resistance is seen near $1,810-$1,815, while a break below $1,780, will target $1,760 region. UAE 24-karat gold price is likely to trade between Dh212 and Dh220 in the days ahead."
Gold on the dip
"People are happy to bid a little bit for gold on the dip. The market is still sort of on the back-foot because of the high yields at the end of last week's close," said Nicholas Frappell, a global general manager at US-based ABC Bullion.
US government bond yields surged last week after Fed minutes suggested the possibility that the central bank might reduce its balance sheet sooner than anticipated. Gold is considered a hedge against higher inflation, but the metal is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion.
Fed funds futures have priced in an almost 90 per cent chance of a rate hike in March and a more than 90 per cent chance of another one by June.
"If inflation data is a little bit hotter than expected, this will only confirm people's expectations (of aggressive tightening from the Fed). You might see a little bit of decline in real yields, and that would be gold positive," Frappell said.
US inflation data is due later this week, with December core CPI expected to have risen 5.4 per cent annually after climbing 4.9 per cent in the prior month.
Spot gold may test a resistance at $1,801 per ounce, a break above could lead to a gain into the range of $1,815 to $1,830, according to Reuters' technical analyst Wang Tao.
Spot silver shed 0.3 per cent to $22.23 an ounce, platinum was flat at $955.55, and palladium fell 0.5 per cent to $1,923.57.