Tuesday saw a decline in gold prices in the UAE and throughout the world due to a stronger currency and several Federal Reserve members' hawkish comments, as investors watched the US debt ceiling debate closely.
By 9.45 am UAE time, spot gold was down 0.47 percent to $1,960.47 per ounce.
For the start of trade on Tuesday in the UAE, 24K was trading for Dh238.0 per gram, down Dh0.75 from last night's market closing. At the same time, the prices for 22K, 21K, and 18K per gram were Dh220.25, Dh213.25, and Dh182.75 correspondingly.
"The market usually becomes weary of the debt ceiling bluster. Although the initial unpredictability benefits gold, the stronger dollar shows that investors are confident a deal will be struck, according to Michael Langford, director at business consultancy company AirGuide, who spoke to Reuters.
US President Joe Biden and House Speaker Kevin McCarthy made a commitment to continue discussing but were unable to come to an agreement on Monday over how to increase the $31.4 trillion debt ceiling for the US government with only 10 days left before a potential default that may destroy the economy.
James Bullard, president of the St. Louis Fed, suggested that raising the policy rate could be necessary, which put further pressure on gold. The demand for the asset with no yield is reduced by rising rates.
Key risks for gold, according to AirGuide's Langford, have, however, diminished as a result of Fed Chairman Jerome Powell's indication that it could be time to stop raising interest rates.
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