Government Imposes Sugar Stock Limits for Dealers Until End of November

Gold prices in Dubai showed a decline on Thursday, following the UAE Central Bank's decision to keep its key interest rate unchanged. This decision came after a similar move by the US Federal Reserve, which opted to maintain rates at their previous level.

Precious Metals Price Dynamics

At the opening of trading on Thursday, 24-karat gold in Dubai traded at AED 487.50 per gram, lower than the AED 491.50 recorded at the close of markets on Wednesday. Other purity options—22K, 21K, 18K, and 14K—cost AED 441.50, AED 432.75, AED 371, and AED 289.25, respectively.

Globally, the price of gold futures rose slightly by 0.12 percent, reaching $4044.99 per ounce, while silver dropped by 1.07 percent to $57.19 per ounce.

UAE Central Bank Policy

The UAE Central Bank kept its base rate at 3.65 percent on Wednesday, which fully aligns with the US Federal Reserve's decision to keep the target range for federal funds within 3.5%–3.75%. The UAE typically follows US monetary policy because the dirham is pegged to the dollar.

Despite the Fed not changing interest rates, regulatory representatives maintained a cautious tone, noting that inflation risks remain despite the recent slowdown in growth.

Financial Analyst Comments

Nick Spencer-Skin, Senior Executive Director at Lunaro Markets Limited, noted that June economic data confirmed the Federal Reserve's decision to leave rates unchanged. He explained that core inflation decreased to 2.6% year-on-year, and the number of hired workers was only 57,000 against a forecast of 114,000. However, he added that the possibility of rate hikes remains due to the June 'dot plot,' where half of the Committee still anticipated at least one hike this year, as well as due to the sharp rise in oil prices during the escalation of hostilities, which casts doubt on inflation improvement.

Vijay Valecha, Chief Investment Officer at Century Financial, agreed that the Fed's decision to maintain rates was consistent with the latest economic data. He emphasized that the June inflation figures were weaker than expected, and the labor market does not show signs of overheating, supporting the arguments for maintaining the current rate level. Valecha added that the current economic indicators are more favorable than those presented to the Fed in June, and it would be unusual for the Fed to react to such data by raising rates at the July meeting, especially since it refrained from doing so in June.

The conversations held in Venezuela, as reported by Rodríguez's press team, focused on exchanging views on macroeconomic prospects and economic policy priorities. Furthermore, aspects of technical assistance to strengthen institutional capacities and the use of international reserves to finance the plan called 'Venezuela Rises,' aimed at recovery after the earthquakes, were discussed.

IMF Financing and Support

Rodríguez had announced on July 17 access to $346 million (equivalent to 302 million euros) from the IMF, an amount designated for reconstruction. The Fund clarified that these assets are part of Venezuela's reserve share at the IMF and are readily available to assist with urgent humanitarian needs resulting from a catastrophe.

Meeting Participants

Present at the meeting were Nigel Chalk, Director of the IMF's Western Hemisphere Department, and Álvaro Piris, head of the IMF mission in Venezuela, among other members. Alongside Rodríguez were Calixto Ortega, Vice President of Economy, and Anabel Pereira, Vice President of Digital Government, respectively, along with the Central Bank President, Luis Pérez, and other officials.

Normalization of Relations

This meeting represents the continuation of the constructive dialogue established in recent months, according to the official statement. The press office informed that the IMF delegation plans to meet with high authorities of the economic team and other public institutions of the Latin American country. This move signals the gradual normalization of relations between Venezuela and the International Monetary Fund, fitting into a larger process of rapprochement with the global financial community.

Recent Context

Relations between the IMF and Venezuela resumed in April, after being suspended since 2019. Since then, contacts between the organization and Rodríguez's interim Government have been frequent, aiming to finalize the necessary technical procedures so that the country can, in the future, access the IMF's financial instruments again.

Impact of Earthquakes

The recent double earthquakes caused more than 5,500 deaths, left at least 16,740 injured, and displaced about 18,000 people, according to official data. Direct material damages are estimated by the World Bank at $19.6 billion (17.1 billion euros).