Introduction Of Gold
It prices surged to a record high in Dubai on Thursday, as the cost of 22K gold surpassed the Dh300 per gram mark for the first time in history. This remarkable rise reflects the global momentum of gold as a safe-haven asset amid economic uncertainties.
Table of Contents
According to data from the Dubai Jewellery Group, 24K gold opened at Dh324.25 per gram, up slightly from Dh323.75 at the market’s close on Wednesday. Meanwhile, the 22K variant rose to Dh300.25 per gram, marking an increase of Dh0.50 per gram overnight. Other popular variants, such as 21K and 18K, also saw price increases, opening at Dh290.75 and Dh249.25 per gram, respectively.
Globally, gold traded at $2,678.58 per ounce by 9:10 a.m. UAE time, reflecting a 0.17% increase. The price surge highlights the strong demand for gold beyond just currency fluctuations. According to Dilin Wu, research strategist at Pepperstone, the factors driving this rise go beyond typical market movements.
“Gold bulls are gaining strength, with prices reaching all-time highs in most G10 currencies and hovering near historical peaks against the US dollar,” said Wu. “This surge reflects real demand for gold rather than just currency dynamics. I believe the $2,700 level is well within reach before the end of October.”
Factors Driving Gold’s Soaring Prices
Several factors are contributing to this unprecedented price increase:
- US Economic Uncertainty: Growing concerns about the US economic outlook have pushed investors toward It. Initial jobless claims in the US exceeded expectations, and Federal Reserve Governor Christopher Waller recently warned that hurricanes and strikes could reduce October’s nonfarm payrolls by as much as 100,000. These signals indicate potential instability in the job market, making It an attractive hedge against economic risk.
- Monetary Policy Volatility: With uncertainty surrounding future US Federal Reserve rate hikes, driven by increasing volatility and unclear monetary policy, investors are turning to gold as a safe-haven asset. The large US deficit, currently estimated at $1.8 trillion, has further fueled concerns about the country’s economic trajectory, boosting demand for the yellow metal.
- Geopolitical and Global Economic Trends: Although there have been no major geopolitical developments influencing gold directly, Wu emphasized that the broader global outlook remains crucial. “Three factors will be pivotal for It trajectory: US retail sales, Fed speeches, and China’s economic outlook,” she explained.
- US Retail Sales: A significant indicator to watch is the upcoming US retail sales report. If retail sales fall below the expected 0.3% month-over-month increase, it could signal further economic weakness, providing additional momentum for It prices.
- Fed’s Rate Cut Ambiguity: Any signs of hesitation from the Federal Reserve on rate cuts could give further strength to It bulls. A more hawkish stance would likely depress gold, while uncertainty would continue to drive prices upward.
- US Election Pricing: The political landscape in the US, especially with Trump’s rising odds, could play a role. A stronger dollar resulting from “Trump trade” may pressure It, though Wu expects support for It prices around $2,660 in that scenario.
- China’s Economic Outlook: The health of China’s economy remains another crucial factor, as economic slowdowns or instability in the world’s second-largest economy can spur gold demand.
Conclusion
As It prices soar to new highs, surpassing Dh300 per gram for the 22K variant in Dubai, the market continues to reflect global economic uncertainty and shifting investor preferences. With geopolitical tensions, monetary policy ambiguity, and a changing economic landscape in the US and China, It is set to remain a favored safe-haven asset in the months to come.
Investors and consumers alike are closely watching for the next significant moves in the It market, particularly in light of upcoming data on US retail sales and Federal Reserve policy decisions. As the global economic outlook remains fluid, It prices could see further upward momentum, pushing beyond the $2,700 per ounce threshold.
