The U.S. gold market isn’t the only thing affected by the pending U.S. Federal Reserve decision to raise interest rates. In the wake of continued uncertainty over when the increase will happen and how much it will be, the price of gold in Dubai declined from Dh150 to Dh149.75 in the last day.
Oddly enough, the price of gold is holding its own despite the strengthening of the dollar and the growing equities market. It is unlikely that this trend will continue, but this seems to be consistent for the short-term as uncertainty in fiscal and economic policies remains. The world market continues to hold its breath awaiting announcements on U.S. interest rate changes.
Gold Price in Dubai on Hold Until Fed Announcement Today
For the first month of the year, investors turned to gold, especially after inaction from the Federal Reserve with respect to interest rates.
Investors in Dubai are awaiting word from the Federal Reserve later today, Feb. 22, 2017. The Fed will release the minutes from its meeting at the end of January. It could spell out the rate changes coming, spurring investors to equities or leading them to invest more in safe havens like gold. Until that announcement, gold prices are expected to hover around the same price. Following this news, the world gold market could see a swing either way.
Global Interest Rates Also Reaching Dubai
Since the global economic crisis in 2008, many countries established stability through extremely low interest rates. Now that economies around the world are regaining their strength, many central banks are in discussions on how to promote the economy while keeping inflation under control. This is a hot topic in the U.S. as well as in the E.U. As the E.U. struggles to balance strong economies like Germany and weaker ones like Greece, the Eurozone countries may see a lag in interest rate changes.
Investors in Dubai and around the world should tune in for the Fed announcement later today where they will provide the minutes from the Federal Open Markets Committee (FOMC). The discussion will likely center on market data, inflation and economic indicators. Decisions from the Fed and other central banking institutions generally use these data points to determine interest rate changes.
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