Gold prices declined after surging to a two-week high on Thursday as U.S. Federal Reserve Chair Jerome Powell hinted at cutting interest rates as early as September.
In the UAE, gold prices rose AED3 with 24-carat gold rising to AED296 while 22-carat gold increased to AED274. Meanwhile, 21-carat gold reached AED265.25 and 18-carat gold reached AED227.25.
Globally, spot gold declined 0.06 percent to $2,444.31, as of 5:10 GMT, after reaching its highest level since July 18 earlier in the session. Gold prices were only $35 below the record high of $2483.60 scaled on July 17.
Meanwhile, U.S. gold futures gained 0.60 percent to $2,487.90.
Fed’s policy easing prospects
Gold prices surged as investors rallied to buy more gold after the U.S. central bank signaled a rate cut as soon as September. Powell said on Wednesday rates could ease as soon as September if the U.S. economy follows its expected path, putting the central bank near the end of a more than two-year battle against inflation amid the nation’s presidential election campaign.
“If they do have something more concrete on rate cuts coming gold should trade up north of $2,500 but if they kind of leave it dragging along, I expect gold to sell off a bit,” stated Bob Haberkorn, senior market strategist at RJO Futures, in a recent social media post.
Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold. Market focus now shifts to Friday’s U.S. payrolls report.
In addition, gold prices rose as support for the safe-haven asset strengthened amid the threat of conflict escalation in the Middle East. “Fed rate cuts coupled with geopolitical risk in the Middle East could potentially push gold to up to $2700 an ounce,” he added.
Read: UAE gold prices surge, global rates rise ahead of Fed policy decision
Other precious metals
The precious metals market saw mixed movement as gold prices slightly declined from their two-week high. Spot silver declined 0.34 percent to $28.94 while platinum lost 1.26 percent to $973.62. However, palladium gained 0.03 percent to $925.56 while copper rose 0.17 percent to $4.17.
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