Gold prices in Dubai rose slightly at the start of trading on Thursday as investors awaited the release of key US inflation data. This data could influence forecasts regarding the Federal Reserve's next interest rate decision.
At the beginning of Thursday's trading, a 24-karat sample was priced at 531.25 dirhams per gram. Meanwhile, 22, 21, 18, and 14-karat samples opened at prices of 492, 471.75, 404.25, and 315.50 dirhams per gram, respectively.
Globally, the spot price of gold fell by 0.13 percent, reaching $4409.2 per ounce according to UAE time at 9:05 AM. Silver dropped by 0.81 percent, trading at $67.52 per ounce.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, noted that gold traders are currently weighing several competing market trends, which is keeping prices largely in the range of around $4400 per ounce.
He explained that rising expectations of a US rate hike and increasing bond yields have posed a significant headwind for gold, as higher yields increase the opportunity cost of holding a non-yielding asset. Nevertheless, the weakening US dollar, sustained investment demand through ETFs and futures, and persistent geopolitical uncertainty helped limit the price decline.
Hansen added that 'gold traders—and algorithmic programs, which constitute a significant portion of daily activity—are currently trying to determine which of several competing themes will ultimately set the tone, generally keeping prices in the range of around $4400.'
He also reported that the Bloomberg Dollar Index fell by 1.25 percent over the last month, driven by the strength of Asian currencies, particularly the Korean won, Japanese yen, and Australian dollar, putting pressure on the US dollar.
According to Hansen, US consumer and producer price data this week could play a crucial role in determining the direction of gold before the September Federal Reserve meeting. He concluded: 'A stronger inflation figure would likely reinforce rate hike expectations and maintain high yields, while softer data could quickly reverse some of the recent aggressive price revisions.'