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The recent rally in the precious metal, which has hit eight-month highs, could see further gains if deflationary trends persist, experts say
Gold prices rose in the UAE and Asia on Thursday morning as traders awaited key U.S. inflation data that could influence the path of Fed policy.
Spot gold was trading at $1,884.21 an ounce as of 9:15 am UAE time.
The precious metal was up 1 dirham per gram at the open in the UAE. 24-carat gold was traded at Dh228.25 a gram, up Dh1 from last night’s close, according to Dubai Jewelery Group. Among other variants of gold, 22K opened at Dh211.25; 21K at Dh204.50; and 18K at Dh175.25 per gram.
Gold is underperforming ahead of the December inflation report, said Edward Moya, senior market analyst at Oanda.
“Fed rate hike expectations are skewed toward a 25 basis point hike at the Feb. 1 meeting, while the March 22 meeting appears to be a toss-up between another small hike or no action. Gold’s recent gains have Eight-month high If the deflationary trend persists, it could expand further,” Moya said.
Naeem Aslam, senior market analyst at AVA Trade, said precious metals prices continued to soar for the past five consecutive days.
“Traders are quite optimistic about the Fed’s monetary policy and believe that the Fed may take a less hawkish policy. Fed Chairman Jerome Powell, who spoke on Tuesday, did not give any major hints about the Fed’s monetary policy. However, traders took a more positive view of his speech and expected the Fed to ease its monetary policy,” Aslam said.
“The most important uncertainty is the U.S. CPI inflation data. If this number does not show satisfactory performance, we may see the dollar index surge on the support of this number, which can easily take away the light from gold prices,” he added.
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