Dubai Gold Rates Fall as Higher US Interest Rates Hit Bullion Markets

Gold prices in Dubai declined across all major categories on Monday, August 31. According to the Dubai Jewellery Group, 24-carat gold dropped by Dh 3.75 per gram to Dh 533.00 from Dh 536.75 in the previous trading session.

The price of 22-carat gold fell to Dh 493.75 per gram from Dh 497.00, while 21-carat gold declined to Dh 473.25 from Dh 476.75. Meanwhile, 18-carat gold fell to Dh 405.75 from Dh 408.50, and 14-carat gold slipped to Dh 316.50 from Dh 318.75.

The lower rates come ahead of Navratri and Diwali, when demand for gold jewellery typically increases among Indian consumers in the United Arab Emirates (UAE). The decline is attributed to international bullion prices coming under pressure due to expectations of higher US interest rates.

As Federal Reserve Chair Kevin Warsh recently said policymakers still had work to do to return inflation to the central bank's 2 per cent target, traders were pricing in a 58 per cent chance of a September rate hike and a 89 per cent probability of an increase by December. This has made gold less attractive as it does not generate interest or dividends.

A stronger US dollar, which reached a more than one-week high, added further pressure on gold prices. Spot gold fell 0.7 per cent to USD 44,423.84 per ounce by 0204 GMT, its lowest level since August 19, after losing more than 3 per cent on Friday.