Gold rallied on Wednesday to touch a record high of $2,480 driven by mounting hopes of a US interest rate cut in September, after recent comments from Federal Reserve officials.
Weakness in economic data and falling inflationary pressures continue to pressure bond yields, which help to boost the appeal of low and zero-yielding assets, keeping the gold outlook positive.
Gold prices hit a high of $2,449.89 on May 20 amid a rally that happened against traditional headwinds, such as a strong dollar and high interest rates. The metal was trading at $2,473.2 at 11.56am UAE time on Wednesday.
“Gold hit a fresh record on the back of falling US yields, that decrease the opportunity cost of holding the non-interest bearing gold, and on the back of rising geopolitical tensions on news that Iran reportedly tried to kill Donald Trump in the past weeks, although there has been no evidence that the weekend’s shooting has anything to do with them,” says Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
“It’s probably just a matter of time before we see the yellow metal hit the $2,500 per ounce milestone.
“Some profit-taking could kick in at that level, though, given that at the current levels, gold is entering the overbought market territory, suggesting that the yellow metal may have been bought too fast in a too short period of time – as the rest of the assets that have been boosted by the super duo of Trump and [Fed chairman Jerome] Powell – and it would be healthy to see some minor downside correction.”
Markets expect a rate cut of at least 25 basis points by the Fed at its September meeting, followed by two more before the end of January 2025. The allure of non-yielding bullion tends to rise when interest rates fall.
Mr Powell said on Monday that recent inflation readings “add somewhat to confidence” that the pace of price increases is returning to the central bank’s target in a sustainable fashion, remarks that suggest a turn to rate cuts may not be far off.
Fed governor Adriana Kugler on Tuesday also expressed cautious optimism that inflation is returning to the US central bank's 2 per cent target.
The US Labour Department reported last week that the core consumer price index fell in June for the first time in more than four years, with the annual rate slowing to 3 per cent from 3.3 per cent in May. Markets are now awaiting the release of US monthly retail sales data for new directional momentum.
The Bank of America issued a note in June suggesting that gold could hit $3,000 an ounce over the next 12 to 18 months. The key is investment demand, the lender said.
Data from the World Gold Council trade body suggests central banks are feeling increasingly warm towards gold as a useful financial asset, rather than a historic keepsake.
Top consumer China still has plenty of appetite for official gold purchases despite pausing in May and June, as its bullion holdings remain low as a share of reserves and geopolitical tensions persist, according to a policy insider, industry experts and data.
Locally, the Central Bank of the UAE's gold reserves reached Dh20.36 billion by the end of April 2024, a 12 per cent increase from the same period in the previous year, said Vijay Valecha, chief investment officer at Century Financial.
The latest data published by the central bank also indicated that its gold stockpile grew by 3.5 per cent month on month, rising from Dh19.615 billion in March 2024, he added.
“There is no doubt that the recent surge in gold prices can be at least partially attributed to a declining dollar and falling bond yields, thanks to weaker-than-expected US data and an unexpected drop to 3 per cent in US consumer inflation last week,” said Fawad Razaqzada, market analyst at City Index and Forex.com.
“These factors have enhanced the attractiveness of assets with low or no interest returns.”
The metal has shown resilience against dollar strength at various points throughout this year, indicating that investors view gold as more than just a foreign exchange product, he said.
Its appeal lies in wealth preservation, particularly as years of high inflation have significantly diminished the purchasing power of fiat currencies around the globe. Gold continues to attract interest for its value retention capabilities, he added.
“Technical indicators suggest continued bullish momentum, making bullish trades favourable over bearish ones with the potential to reach new record highs soon,” Mr Razaqzada said.
The gold trend appears strongly bullish in the near term due to growing expectations that the Fed will start cutting interest rates in September, said Rania Gule, market analyst at XS.com.
Dovish remarks from Mr Powell increased hopes for the beginning of monetary easing soon, adding to the rate-cut trend and further boosting gold prices, she added.
“Here, the price could be influenced by upcoming data, increasing its sensitivity in either upward or corrective downward directions, so traders and investors should exercise caution," Ms Gule added.
Tips for job-seekers
- Do not submit your application through the Easy Apply button on LinkedIn. Employers receive between 600 and 800 replies for each job advert on the platform. If you are the right fit for a job, connect to a relevant person in the company on LinkedIn and send them a direct message.
- Make sure you are an exact fit for the job advertised. If you are an HR manager with five years’ experience in retail and the job requires a similar candidate with five years’ experience in consumer, you should apply. But if you have no experience in HR, do not apply for the job.
David Mackenzie, founder of recruitment agency Mackenzie Jones Middle East
Tips to stay safe during hot weather
- Stay hydrated: Drink plenty of fluids, especially water. Avoid alcohol and caffeine, which can increase dehydration.
- Seek cool environments: Use air conditioning, fans, or visit community spaces with climate control.
- Limit outdoor activities: Avoid strenuous activity during peak heat. If outside, seek shade and wear a wide-brimmed hat.
- Dress appropriately: Wear lightweight, loose and light-coloured clothing to facilitate heat loss.
- Check on vulnerable people: Regularly check in on elderly neighbours, young children and those with health conditions.
- Home adaptations: Use blinds or curtains to block sunlight, avoid using ovens or stoves, and ventilate living spaces during cooler hours.
- Recognise heat illness: Learn the signs of heat exhaustion and heat stroke (dizziness, confusion, rapid pulse, nausea), and seek medical attention if symptoms occur.
About Karol Nawrocki
• Supports military aid for Ukraine, unlike other eurosceptic leaders, but he will oppose its membership in western alliances.
• A nationalist, his campaign slogan was Poland First. "Let's help others, but let's take care of our own citizens first," he said on social media in April.
• Cultivates tough-guy image, posting videos of himself at shooting ranges and in boxing rings.
• Met Donald Trump at the White House and received his backing.
UAE SQUAD
UAE team
1. Chris Jones-Griffiths 2. Gio Fourie 3. Craig Nutt 4. Daniel Perry 5. Isaac Porter 6. Matt Mills 7. Hamish Anderson 8. Jaen Botes 9. Barry Dwyer 10. Luke Stevenson (captain) 11. Sean Carey 12. Andrew Powell 13. Saki Naisau 14. Thinus Steyn 15. Matt Richards
Replacements
16. Lukas Waddington 17. Murray Reason 18. Ahmed Moosa 19. Stephen Ferguson 20. Sean Stevens 21. Ed Armitage 22. Kini Natuna 23. Majid Al Balooshi
Killing of Qassem Suleimani
UAE currency: the story behind the money in your pockets
Iftar programme at the Sheikh Mohammed Centre for Cultural Understanding
Established in 1998, the Sheikh Mohammed Centre for Cultural Understanding was created with a vision to teach residents about the traditions and customs of the UAE. Its motto is ‘open doors, open minds’. All year-round, visitors can sign up for a traditional Emirati breakfast, lunch or dinner meal, as well as a range of walking tours, including ones to sites such as the Jumeirah Mosque or Al Fahidi Historical Neighbourhood.
Every year during Ramadan, an iftar programme is rolled out. This allows guests to break their fast with the centre’s presenters, visit a nearby mosque and observe their guides while they pray. These events last for about two hours and are open to the public, or can be booked for a private event.
Until the end of Ramadan, the iftar events take place from 7pm until 9pm, from Saturday to Thursday. Advanced booking is required.
For more details, email openminds@cultures.ae or visit www.cultures.ae
COMPANY%20PROFILE
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GOLF’S RAHMBO
- 5 wins in 22 months as pro
- Three wins in past 10 starts
- 45 pro starts worldwide: 5 wins, 17 top 5s
- Ranked 551th in world on debut, now No 4 (was No 2 earlier this year)
- 5th player in last 30 years to win 3 European Tour and 2 PGA Tour titles before age 24 (Woods, Garcia, McIlroy, Spieth)
Emirates exiles
Will Wilson is not the first player to have attained high-class representative honours after first learning to play rugby on the playing fields of UAE.
Jonny Macdonald
Abu Dhabi-born and raised, the current Jebel Ali Dragons assistant coach was selected to play for Scotland at the Hong Kong Sevens in 2011.
Jordan Onojaife
Having started rugby by chance when the Jumeirah College team were short of players, he later won the World Under 20 Championship with England.
Devante Onojaife
Followed older brother Jordan into England age-group rugby, as well as the pro game at Northampton Saints, but recently switched allegiance to Scotland.
BULKWHIZ PROFILE
Date started: February 2017
Founders: Amira Rashad (CEO), Yusuf Saber (CTO), Mahmoud Sayedahmed (adviser), Reda Bouraoui (adviser)
Based: Dubai, UAE
Sector: E-commerce
Size: 50 employees
Funding: approximately $6m
Investors: Beco Capital, Enabling Future and Wain in the UAE; China's MSA Capital; 500 Startups; Faith Capital and Savour Ventures in Kuwait
COMPANY%20PROFILE
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How to get there
Emirates (www.emirates.com) flies directly to Hanoi, Vietnam, with fares starting from around Dh2,725 return, while Etihad (www.etihad.com) fares cost about Dh2,213 return with a stop. Chuong is 25 kilometres south of Hanoi.
Uefa Nations League: How it works
The Uefa Nations League, introduced last year, has reached its final stage, to be played over five days in northern Portugal. The format of its closing tournament is compact, spread over two semi-finals, with the first, Portugal versus Switzerland in Porto on Wednesday evening, and the second, England against the Netherlands, in Guimaraes, on Thursday.
The winners of each semi will then meet at Porto’s Dragao stadium on Sunday, with the losing semi-finalists contesting a third-place play-off in Guimaraes earlier that day.
Qualifying for the final stage was via League A of the inaugural Nations League, in which the top 12 European countries according to Uefa's co-efficient seeding system were divided into four groups, the teams playing each other twice between September and November. Portugal, who finished above Italy and Poland, successfully bid to host the finals.
