Gold prices slightly decreased in Dubai and the UAE on Friday morning. According to data from Dubai Jewellery Group, 24K and 22K precious metal options traded at 522 and 438.5 dirhams per gram, respectively, when the market opened on Friday morning.
The price of 24K gold fell by almost 38 dirhams per gram since August 25th. Among other varieties, 21K, 18K, and 14K dropped to 463.5, 397.25, and 310 dirhams per gram, respectively.
The spot gold rate was $4331 per ounce, which is 0.8 percent lower. Silver decreased by 1.1 percent to $63.6 per ounce.
Simon-Peter Massabni, Head of Business Development at xs.com, noted that gold is undergoing a sharp correction during Thursday's trading. This pressure is caused by the strengthening of the US dollar, rising Treasury yields, and growing expectations that the Federal Reserve will maintain restrictive monetary policy.
He explained that one of the key factors in the decline was the recovery of US Treasury yields. The yield on 10-year bonds returned to 4.90 percent. In contrast, long-term rates remained under pressure after the US government's plan to buy up to $6 billion in long-term debt was lower than some market participants expected. Higher rates increase the opportunity cost of holding gold, which does not generate interest.
Furthermore, the dollar regained ground against major world currencies after recent trading at a two-week low. The combination of higher rates and expectations of sustained high interest rates has once again increased the relative attractiveness of dollar-denominated assets. For gold, a stronger dollar is usually a negative factor because it makes the metal more expensive for investors using other currencies.
Adding to these factors was a sharp rise in oil prices. Brent crude oil once again exceeded the $100 per barrel threshold and traded above $105 during the session, while WTI also rose above $100.
Geopolitical tensions and energy supply risks in the Middle East continue to support high prices, while simultaneously fueling concerns about a new wave of energy-related inflation. Massabni added that the oil rally creates a complex environment for gold. Although geopolitical tension usually supports demand for safe-haven assets, keeping oil prices above $100 may force major central banks to keep interest rates higher for longer. In the short term, this effect outweighs the safe-haven demand, creating additional pressure on precious metals.
