Gold prices declined on Monday despite a weaker dollar and Treasury yields following the U.S. Federal Reserve Chair Jerome Powell’s comments which hinted at a September interest rate cut.
In the UAE, gold prices lost AED0.25 with 24-carat gold inching down to AED304 and 22-carat gold declining to AED281.25. Meanwhile, 21-carat gold reached AED272.50 and 18-carat gold hit AED233.50.
Globally, spot gold fell 0.25 percent to $2,509.50 as of 5:08 GMT, after hitting a new all-time high of $2,531.60 last week. Meanwhile, U.S. gold futures declined 0.03 percent to $2,545.55.
Cooling labor market
Gold prices declined after gaining more than 1 percent in the previous session after Powell backed the start of policy easing in his speech on Friday. Powell delivered his speech at the Kansas City Fed’s annual economic symposium in Jackson Hole on Friday, which has impacted the U.S. dollar.
The central bank’s chair said that “the time has come” for the Fed to begin lowering interest rates. Powell acknowledged recent softness in the labor market in his speech and added that the Fed did not “seek or welcome further cooling in labor market conditions”.
U.S. dollar dips
The dollar hovered near its lowest level in 13 months, making gold cheaper for other currency holders while benchmark 10-year yields also slipped. Market analysts said that if the dollar and yields remained weak, gold prices may rise to $2,550 this week ahead of the first interest rate cuts.
Traders have fully priced in a rate cut for next month, with a 64 percent chance of a 25-basis-point cut and a 36 percent chance of a bigger 50-basis-point reduction, according to the CME FedWatch tool. A low interest rate environment traditionally boosts the appeal of non-yielding assets like gold.
Elsewhere, Peru’s gold exports to India are expected to rise by 36 percent to a record $3 billion in 2024 due to rising demand from the world’s second-largest consumer, a senior official said on Friday.
Read: UAE gold prices decline, global rates set for weekly fall after slipping from record highs
Other precious metals
In line with the decline in gold prices, the precious metals market dipped on Monday. Spot silver fell 0.49 percent to $29.67, platinum was down 0.20 percent to $961.15, and palladium declined 0.90 percent to $954.03.
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