The Yellow Metal Loses Value
The yellow metal experienced a sharp drop in prices over the weekend. The ongoing standoff regarding the Strait of Hormuz keeps energy prices high. This adds pressure on the Federal Reserve to lift interest rates again. They continue their aggressive fight against stubborn global economic inflation. In the UAE, gold prices opened significantly lower this Monday morning. Retail 24-karat gold currently trades at Dh505.50 across local jewelry stores. This marks a drop of Dh11 overnight compared to its previous close. Retail 22-karat gold currently trades at Dh468 in the local market.
Tracking The Global Bullion Market
The price for 14-karat gold dropped to just Dh300 per gram. The global bullion trade saw a sharp decline of 1.8 percent. Prices fell below the highly watched $4,200 level internationally. This extends a prior slide where gold lost more than two percent. Crude oil rose after Tehran refused to alter its strait reopening conditions. Trump anticipates negotiations will resume later this week. Fed officials previously backed a quarter-point increase in the benchmark rate. Several officials signaled that further interest rate hikes could be needed soon.
Bonds Versus Gold Assets
Markets price in a 65 percent chance of an October rate increase. Higher interest rates generally make non-yielding assets like gold less attractive. Justin Lin works as an analyst at Global X ETFs. He told Bloomberg that gold remains tied to shifting regional hopes. "Much of the natural buyer base is likely to remain on the sidelines," Lin added. Sellers take their cues from real yields, which continue moving higher. Gold stayed in a relatively narrow range throughout the month of September. Traders repeatedly reassess exactly where current Federal Reserve policy is headed.
Other Precious Metals Fall
Prices remain far below January's all-time high of nearly $5,600. Despite the price drop, corporate dealmaking in the gold sector continues. Spot gold was down 1.88 percent at $4,197.54 an ounce in Dubai. Silver shed 3.41 percent to reach $61.98 during morning trading. Platinum and palladium both fell by more than two percent today. The Bloomberg Dollar Spot Index rose 0.1 percent this morning. The strong dollar makes dollar-priced gold more expensive for foreign buyers. Investors will watch the upcoming diplomatic talks very closely. Keep track of the global economy and your personal investments. Find vital financial news and market analysis at The WAU.
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