The prices of gold in the UAE dropped marginally on Tuesday morning. The 24K gold was at AED 281.75 per gram to AED 0.25. Other may include 22k, 21k, and 18k that fell marginally. Globally, gold dived by 0.23 percent because of $2,326.78 an ounce. The main drivers of the trend are the uncertainty of the future decisions on interest rates by the US Federal Reserve and the political turbulence in the US and Europe.

PC: The Economic Times

Daniel Takieddine, MENA CEO of BDSwiss, commented that the price of gold depends on a lot of key factors. One of them is how the US Federal Reserve has handled interest rates and the change in approach with the first signs of a slowdown in inflation. There seems to be some dissent within the Members of the FOMC over the proposed rate cuts, engendering a mixed outlook that eventually impacts investor sentiment.

Not only that, but political events are also conspiring to complicate matters in the markets. Indeed, the recent debate between President Joe Biden and former President Donald Trump has increased the stakes of political uncertainty in the US, and French parliamentary elections have thrown up a host of questions about policy changes; therefore, global economic uncertainty will get elevated.

Thus, these broader economic and political uncertainties have a bearing on the gold market of the UAE as well. It could therefore be inextricably linked with world trends. Thus, in times of instability, investors often take a fancy towards gold as a safe haven, leading to fluctuations in its price. The slight dip in prices of gold in the UAE could be a temporary response to these global events, with potential for future volatility depending on how these situations evolve.

The trajectory of gold prices is likely to be dictated by actions and decisions of the Federal Reserve, as well as political developments in large economies. If the Fed enforces rate cuts, gold prices are more likely to rebound. However, if there is further widespread opposition within the FOMC, and political uncertainties linger, the downward pressure on gold may not let up.

In light of these international factors, gold traders and investors in the UAE will certainly keep an extremely close watch. A mix of global forces and domestic economic conditions will determine the local market response.

In a nutshell, the gold prices in UAE have eased slightly at the opening of Tuesday trading with 24K gold guiding AED 281.75 per gram after going down by AED 0.25. This drop, going by the global trend, was in tandem with the declining gold prices by 0.23%, as uncertainty over US Federal Reserve interest rate decisions and political instability in the US and Europe built up. The response of the market is left to the mercy of future rate cuts and political developments that are going to needle investor confidence and price volatility.