Gold prices continued to decline as the precious metal lost more than 3 dirhams per gram at the start of trading on Wednesday.
According to data from Dubai Jewellery Group, the price of 24-karat gold fell to 519.25 dirhams per gram on Wednesday morning, compared to 522 dirhams per gram after Tuesday's trading. Over nine days, the price dropped by almost 39 dirhams per gram.
Similarly, prices for 22, 21, 18, and 14-karat gold decreased to 480.75, 461.0, 395.0, and 308.25 dirhams per gram, respectively.
Spot gold fell below the $4400 mark, trading at $4304 per ounce, which represents a loss of approximately one percent at the start of trading.
Simon-Peter Massabni, Head of Business Development at xs.com, noted that pressure on gold has returned amid the increased influence of high treasury bond yields. These high rates continue to create a high alternative cost, which prevents gold from recovering at the pace observed previously.
He explained that renewed clashes in the Middle East, along with growing pessimism regarding future monetary policy of the Federal Reserve for the remainder of the year, kept yields at a high level.
Following Kevin Warsh's pessimistic remarks in Jackson Hole on Friday, the market began favoring more pessimistic interest rate scenarios. According to the CME FedWatch Tool, the probability of the Fed raising rates by more than half a percentage point is nearly 47 percent.
Warsh generally explained that inflation risks remain high and monetary conditions are not tight enough, which contributed to the resumption of strong negative influence from high yields.
Massabni added that this trend worsened due to new clashes between the US and Iran, when the US struck two launch sites on Lark Island.