Gold prices saw a decline on Wednesday following softer-than-expected U.S. retail sales data which raised hopes for an interest rate cut by the Federal Reserve this year.
In the UAE, gold prices saw a marginal increase with 24-carat gold rising to AED282 per gram, while 22-carat gold remained stable at AED261.00. Twenty-one-carat gold rose to AED252.75 while 18-carat gold increased to AED216.75.
Globally, spot gold saw a 0.01 percent decrease to $2,328.09 per ounce, as of 5:15 GMT. Meanwhile, U.S. gold futures declined 0.17 percent to $2,342.90.
The dollar index inched up 0.04 percent, making gold more expensive for holders of other currencies, while U.S. 10-year treasury yields declined 0.06 percent.
Rate cut hopes rise
Gold prices saw a decline after rising in the previous session on softer-than-expected U.S. retail sales, which brought the dollar index lower, providing some support for bullion. In May, U.S. retail sales saw a 0.1 percent increase, according to data from the Department of Commerce’s Census Bureau.
In a statement, Federal Reserve Bank of New York president John Williams said interest rates will decline gradually but did not provide a clear timeline for the rate cuts. Traders are currently pricing in about a 67 percent chance of an interest rate cut in September, according to the CME FedWatch Tool. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.
Since rising to their record high of $2,449.89 last month, gold prices have lost around 6 percent on a stronger dollar and higher interest rates.
Another factor impacting gold’s short-term performance is the China central bank’s pause on buying gold in May, which impacted demand for the metal. However, a recent World Gold Council report reveals that central banks expect to raise their gold reserves in the next 12 months.
Read: Three new IPOs add $5.8 billion to UAE’s stock market capitalization in 2024
Other precious metals
In line with the decline in gold prices, spot silver lost 0.39 percent to $29.40. Meanwhile, platinum declined 0.22 percent $970.56 and palladium lost 0.06 percent to $886.35.
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