Gold prices continued to trade below the 500 dirham mark on Monday morning, extending the decline observed last week. Investors weighed a stronger macroeconomic backdrop against signs of precious metal resilience.
Gold prices continued to trade below the 500 dirham mark on Monday morning, extending the decline observed last week. Investors weighed a stronger macroeconomic backdrop against signs of precious metal resilience.
The price of 24-karat gold opened at 488.75 dirhams per gram on Monday, which is lower than the 496.50 dirhams per gram recorded when markets closed on Friday. Among other varieties of precious metals, such as 22K, 21K, and 18K, prices were 452.50 dirhams, 434 dirhams, and 372 dirhams, respectively.
The spot weight of gold at 9:10 AM UAE time was at a low level—$4070.49 per ounce, down by 0.41 percent. Silver also lost 0.91 percent, trading at $58.5 per ounce.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, noted that gold has shown notable resilience despite several obstacles. These include rising oil and fuel prices, hawkish signals from the minutes of the latest US Federal Reserve meeting, and increasing bond yields.
Hansen stated that 'gold held up well given what was thrown at it.' He added that the metal found support before the $4050 level before recovering amid a weakening US dollar and falling bond yields.
According to the analyst, the recent price dynamics indicate a shift for gold from a 'capitulation to consolidation' phase. This means that the period of forced selling may largely be over, even if the metal is not yet ready to resume its previous upward trend. Selling is becoming more difficult, and the US dollar, despite heightened geopolitical tensions and expectations of tighter interest rate policy, is also showing signs of losing momentum.
In the long term, Hansen believes that the forecast for gold will largely depend on inflation, energy prices, and the strength of the US labor market. Sustained growth in oil prices could support high inflation levels and prompt markets to price in a more aggressive response from the Federal Reserve. Nevertheless, he believes that recent signs of weakness in US employment data make an immediate rate hike impossible, forcing investors to focus on upcoming economic data that may determine the next move for both the dollar and precious metals.
Gold prices in Dubai have shown stabilization after declining by $60 over the past month. Simon-Peter Massabni, Head of Business Development at XS.com, noted that the continuation of the downward trend in gold prices is linked to low expectations for a comprehensive resolution to the war in the Middle East.
These low expectations support pessimism regarding the course of the Federal Reserve's tight monetary policy. Furthermore, Massabni reported that there are no significant capital inflows into the gold market, as major physical gold exchange-traded funds have not recorded receipts in recent days.
The situation could be worsened by weak consumer demand for the yellow metal from private individuals. Regarding the geopolitical situation, Massabni added that expectations continue for interim results, which, according to him, do not go beyond purely technical levels in the implementation of the memorandum of understanding. He also mentioned that the United States and Iran continue to publicly declare disagreements, which led to clashes last week and disruptions during negotiation sessions.
