Dubai: Gold prices declined in Dubai on Monday, August 31, bringing down rates across all major categories at the start of the week’s trading.
According to the Dubai Jewellery Group, 24-carat gold fell by Dh 3.75 per gram to Dh 533.00 from Dh 536.75 in the previous trading session.
The price of 22-carat gold dropped to Dh 493.75 per gram from Dh 497.00, while 21-carat gold declined to Dh 473.25 from Dh 476.75. Meanwhile, 18-carat gold fell to Dh 405.75 from Dh 408.50, and 14-carat gold slipped to Dh 316.50 from Dh 318.75.
The lower rates come ahead of Navratri and Diwali, when demand for gold jewellery typically increases among Indian consumers in the United Arab Emirates (UAE).
Why are gold prices falling?
International bullion prices came under pressure as markets adjusted to expectations of higher US interest rates. Federal Reserve Chair Kevin Warsh recently said policymakers still had work to do to return inflation to the central bank’s 2 per cent target.
Reuters reported that traders were pricing in a 58 per cent chance of a September rate hike, compared with 36 per cent before Warsh’s remarks. The probability of an increase by December had risen to 89 per cent, according to the CME FedWatch tool.
Gold, which does not generate interest or dividends, can become less attractive when interest rates and bond yields rise. A stronger US dollar, which reached a more than one-week high, added further pressure.
“Gold is getting slapped hard as Chair Warsh affirms that inflation isn’t meaningfully slowing and the Fed has ‘work to do’,” independent analyst Tai Wong told Reuters.
Spot gold fell 0.7 per cent to USD 44,423.84 per ounce by 0204 GMT, its lowest level since August 19, after losing more than 3 per cent on Friday.
Markets were also assessing developments in the Middle East after US forces struck two Iranian launchers on Larak Island early on Monday, in the first known American strikes on Iran since late July. Oil prices rose following the development.
Gold is commonly considered a safe-haven asset during periods of economic and geopolitical uncertainty, although its price remains sensitive to interest rate expectations, bond yields and the strength of the US dollar.
