Dubai: Global commodity prices and equity markets engage in a mild reset on Day 2 of the Russia-Ukraine conflict, with gold falling nearly $1,950 an ounce.
Gold is trading at $1,916 (Dubai gold rate is Dh223 per gram for 22,000 but will drop once the first rate of the day is revealed), while oil is now past from its peak of $105 a barrel to $95. Market analysts say the shift in sentiment began with US equity markets yesterday (February 24) and has since spread to other categories and geographies. “The US president saying the US has no intention of directly intervening helped ease market fears,” a market analyst said.
Gold – buyers stay on the margins
Even after yesterday’s overpowered gains fell, gold is still too expensive for most buyers. According to Anil Dhanak, Managing Director of Kanz Jewels, “A gain of $100 an ounce, then a decline, then a rise of $50 – what can be said for sure about what gold is going to do next?”
UAE jewelry industry sources say they have not seen gold prices rise as quickly and in such a short time as yesterday after the first shots and missiles were fired. traded across the Russian-Ukrainian border.
UAE stocks started the day strong and emerged from the sell off seen yesterday. All major Asian stock markets except Hong Kong trended positive on Friday, with India Sensex up a substantial 1,600 points.
On DFM, 17 stocks are trending higher, with the overall index up 1.1%, while on ADX, FAB and Aldar led the rally.
Commenting on the outlook for the UAE market, Vijay Valecha, Chief Investment Officer of Century Financial, said: “A rollercoaster of a session happened yesterday in the markets in the belief that a bigger war was breaking out. US markets rebounded strongly (when President Biden said the US would not get directly involved) and this could most likely be the case for the UAE today at the open.
Profit taking took place yesterday on stocks in the UAE real estate and banking sector, which could be great entry points for many who have missed the rally so far. In the commodity markets, we could see some profit taking in the Oil & Gas sector as Oil is down from the highs we saw yesterday.
Indian rupee starts strong
The Indian Rupee also felt a pick-up in sentiment, firming up to Rs20.35 per dirham from Rs20.57 at which it closed yesterday. “The mood on the Sensex – which made significant gains today (February 25) – is reflected to some extent on the rupee,” said Antony Jos, executive director of Joyalukkas Exchange. “But it is still volatile and we can expect some pressure pushing it to levels of Rs20.50/20.52. Everything is touch and go.
The lowest point for the rupee is the Rs20.58 it touched earlier this month. For Indian expats based in the UAE, they better adopt a wait-and-see attitude before their next installment. “There will be extreme volatility in the currency and commodity markets until at least mid-March when the US Federal Reserve meets.
Then will come the first of the interest rate hikes and that will add its own momentum to markets everywhere. Russian-Ukrainian and US interest rates will be on everyone’s agenda.