Gold prices opened higher in the UAE markets on Friday morning.
The 24K variant of gold was trading at Dh288 per gram, compared to last night’s close of Dh287.5 per gram. Other variants including 22K, 21K, and 18K were trading at Dh266.75, Dh258.25, and Dh221.25 per gram, respectively.
Spot gold was selling at $2,381.3 per ounce, showing a 0.13% increase.
Ole Hansen, head of commodities strategy at Saxo Bank, noted that once the rate cut cycle begins later this year, gold is likely to experience renewed demand from exchange-traded fund (ETF) investors. Many of these investors have been net sellers since 2022, when the interest rate cycle started.
“This process helped lift the cost of holding non-interest-paying gold relative to US T-bills, which currently offer a 12-month return above 5 percent,” he stated.
Hansen continued: “Gold has held above technical levels throughout the latest and, once again, shallow consolidation phase, which otherwise could have triggered long liquidation from managed money accounts. It is currently holding an elevated speculative long position in the futures market.”
Gold prices have largely been influenced by the US Federal Reserve’s decisions to cut rates and geopolitical tensions in the region.
“The general stance among traders is that perhaps the Fed will cut interest rates as early as September. Despite the disappointment of not being the first major central bank among the Bank of England and the European Central Bank to lower their rates by next month, an interest rate cut is still imminent,” stated Naeem Aslam, chief investment officer at Zaye Capital Markets.
