By: Economy Middle east

Gold prices saw a downward trend during Monday’s session, facing pressure from low trading liquidity because major markets in both the United States and China were closed for national holidays. Further contributing to the decline was the behavior of investors who chose to secure profits following a substantial 2.5 percent increase during the previous trading day. As a result, spot gold witnessed a decrease of 1.06 percent, bringing the price to $4,988.27 per ounce, while U.S. gold futures designated for April delivery retreated by 0.8 percent to reach $5,005.96 per ounce.

Within the United Arab Emirates (UAE), the local gold market mirrored this international downturn with visible price drops across all carats. The value of 24-carat gold fell by AED7.75 to settle at AED599.75, and 22-carat gold saw a reduction of AED7.25, bringing its price to AED555.25. Furthermore, 21-carat gold moved lower by AED6.75 to AED532.50, while 18-carat gold dipped by AED6.00 to AED462.25. Additionally, 14-carat gold decreased by AED4.50 to a price of AED356.00.

Market closures and CPI

The closure of U.S. markets was due to the Presidents’ Day holiday, and Chinese markets remained inactive in observance of the Lunar New Year. Regarding economic data, the Bureau of Labor Statistics reported on Friday that the Consumer Price Index saw a 0.2 percent rise in January, following a December gain of 0.3 percent that was not revised. This figure came in slightly lower than the 0.3 percent increase that economists surveyed by Reuters had originally predicted.

The modest pullback on Monday was also attributed to a slight recovery in the U.S. Dollar Index, which rose 0.1 percent to 98.43, making dollar-denominated bullion more expensive for international buyers. Despite this, reports indicate a potential structural shift in global gold demand as the Kremlin explores an economic partnership with the Trump administration, which could see Russia returning to trade in U.S. Dollars and potentially slowing the de-dollarization trend led by BRICS nations. 

Federal Reserve interest outlook

Austan Goolsbee, President of the Federal Reserve Bank of Chicago, mentioned on Friday that there is a possibility for interest rates to decrease, though he cautioned that inflation within the services sector stayed elevated. Investors currently expect the Federal Reserve to maintain existing interest rates during the upcoming meeting scheduled for March 18. Nevertheless, according to LSEG data, the market is factoring in 75 basis points of total rate reductions for the year, with the initial cut projected to occur in July.

Geopolitical factors and other precious metals

Bullion, which does not provide a yield, generally performs better when interest rates are low. FEDWATCH. On the geopolitical stage, a potential U.S. military operation against Iran—should President Donald Trump authorize an attack—could span several weeks and trigger a conflict far more severe than any prior engagement between the two countries.

In other precious metals, spot silver dropped by as much as 2.28 percent to $75.67 per ounce after rising 3 percent on Friday, spot platinum decreased by 0.82 percent to $2,046.00 per ounce, and palladium fell by 1.31 percent to $1,656.00.