Gold prices in the United Arab Emirates dropped by 5 dirhams per gram on Tuesday morning. This decline continued the recent market weakness as expectations of interest rate hikes in the US and persistent inflation concerns outweighed demand for safe-haven assets driven by regional tensions.
The price of 24-karat gold traded at 488 dirhams per gram, which is below the 483 dirhams recorded at the close of Monday, representing a loss of 5 dirhams. According to Dubai Jewellery Group data, other precious metal options also showed a decline: 22K, 21K, 18K, and 14K fell to 495.25, 474.75, 407, and 317.5 dirhams per gram, respectively.
Globally, the spot gold price rose by 0.93 percent, reaching $4050 per ounce according to UAE time at 9:10 AM. Silver also increased by 1.84 percent, trading at $57.87, after falling by 6.5 percent last week. Analysts note that dollar stability provided some support to bullion, but the overall situation remains complex due to rising oil prices, which intensify inflation fears.
Vijay Valecha, Director of Investments at Century Financial, stated that recent events create a significant hurdle for non-yielding assets like gold. He noted that the rise in Brent crude oil prices above $90 per barrel heightens concerns that higher energy costs could sustain high inflation. Furthermore, according to the CME Fedwatch tool, markets are now pricing in an 80 percent probability of an FOMC rate hike by December, up from 73 percent last week.
Valecha added that geopolitical escalation forces investors to weigh risks regarding safe-haven assets against the backdrop of expected US interest rate hikes. While geopolitical uncertainty continues to support some flight-to-safety demand, the inflationary impact of the conflict and expectations of high long-term rates are currently limiting gold's growth potential. From a technical standpoint, the short-term outlook remains bearish. On the four-hour chart, gold is trading within a downtrending channel and below key moving averages. Immediate resistance is seen at the 4040–4045 dollar level at the upper boundary of the channel, while support is around $3970, a level recently tested multiple times. A sustained breakout above the channel could support a recovery, whereas a move below $3970 could lead to further declines towards $3920.
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.
