Gold prices rose on Monday amid rising concerns over a recession in the U.S., which boosted safe-haven demand for the precious metal. Demand for gold is also on the rise amid growing expectations of a September rate cut from the Federal Reserve.
In the UAE, gold prices rose AED0.75 with 24-carat gold rising to AED296.75 while 22-carat gold increased to AED274.75. Meanwhile, 21-carat gold reached AED266 and 18-carat gold reached AED228.
Globally, spot gold rose 0.42 percent to $2,451.52, as of 5:08 GMT. Meanwhile, U.S. gold futures gained 0.85 percent to $2,490.80.
Profit-taking signals
Gold prices rose despite signs of some profit-taking happening as traders try to gauge how aggressive the Fed’s September rate cut will be. However, the factors impacting the precious metals still signal a further increase in prices amid expectations for dovish U.S. monetary policy.
Economic data on Friday revealed that U.S. job growth in July fell short of expectations with the unemployment rate rising to 4.3 percent, signaling a possible weakness in the labor market which further raised concerns over a recession. This also supported the case for an interest rate cut in September.
Larger rate cut bets
Traders are pricing in over a 70 percent chance of the U.S. central bank lowering interest rates by a larger 50 basis points in September, according to CME FedWatch tool. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.
Investors now await the release of the final July S&P Global services and ISM non-manufacturing PMI due later in the day.
Read: Dubai Financial Market sees spike in new investor accounts, up 85 percent to 56,345
Other precious metals
The precious metals market saw mixed movement as gold prices rose. Spot silver rose 0.25 percent to $28.62 while platinum declined 0.87 percent to $949.52. In addition, palladium declined 0.28 percent to $887.34 while copper gained 0.20 percent to $4.09.
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