Gold in the UAE: should I buy or keep? Prices set to fall as inflation rises around the world
Globally, the spot price of gold fell 0.6% to $1,859.90 per ounce. U.S. gold futures, indicative of short-term prices, also fell 0.6% to $1,864.40.
Gold, which is often seen as a safe haven in times of economic crisis, hit its highest since May 9 earlier in the session at $1,877.05 an ounce.
Analysts gauged how gold could be heading for another rally, with warnings of a global economic slowdown paving the way for another push towards $2,000 an ounce.
However, that’s when surging inflation data drove the price of the yellow metal down. Will this downward price trend continue in the coming weeks? Analysts believe it will.
Additionally, yields on benchmark 10-year US government bonds also rose to their highest level since May 9, weighing on demand for zero-yield gold.
“The fact that gold has disconnected from its reverse move against the US dollar suggests to me that markets are lately moving into a much more vigorous risk aversion mode (due to inflation data),” he said. said OANDA senior analyst Jeffrey Halley.
Consumer prices in the United States accelerated in May, suggesting that the country’s central bank could continue its interest rate hikes of 50 basis points until September to fight inflation. Such a trend is also observed elsewhere in the world.
“The data sent an unsympathetic wake-up call to financial markets that inflation remains both entrenched and poses real upside risks. Gold is benefiting from a shift into defensive safe haven positioning as equities and cryptos are hammered,” Halley said.