Gold prices in Dubai showed an increase on Thursday morning, following the US Federal Reserve's decision to raise interest rates for the first time in three years.
At the market open on Thursday, 24-karat gold traded at 518 dirhams per gram, which is higher than the 512 dirhams per gram recorded when markets closed on Wednesday. Other varieties, including 22K, 21K, 18K, and 14K, also showed growth, reaching prices of 479.50 dirhams, 459.75 dirhams, 394.25 dirhams, and 307.50 dirhams per gram, respectively.
Globally, spot gold traded at $4297.61 per ounce, declining by 1.13 percent according to UAE time at 9:10 AM. This drop followed a sharp fall from the August high of $4692. Silver fell by 1.12 percent, trading at $63.72.
The UAE Central Bank raised its base rate by 25 basis points to 3.9 percent, which occurred after the US Federal Reserve's decision made late Wednesday evening.
Financial analyst and Investment Director at Century Financial, Vijay Valecha, noted that gold investors sharply reduced their positions in anticipation of the rate decision. He stated that the structural fund remains favorable in the medium term. According to the latest data from the World Gold Council, ETFs demonstrated a sharp recovery from July lows to early-year levels, and central banks continue to steadily accumulate gold, which should help limit further decline once the current pressure from rate hikes subsides.
From a technical perspective, Valecha believes that gold remains confined within a downward channel from the late August high, with resistance at $4352 (top of the channel) and a stronger barrier at $4509. Support is located at $4273, followed by the $4200 level. While maintaining the structure, the preferred approach is 'sell on rise' towards the channel resistance, but a decisive breakout above $4509 would call into question the bearish scenario, and an unexpected decision to hold the rate would likely trigger this breakout.
As for silver, it is also recovering from support around $62.00 within its own downward trend line from the early September high. Resistance is at $65.49, and then at the trend line itself around $66.00–$67.00. Similarly, a 'sell on rise' bias is preferred while the price remains below these levels; a break above $66.00 is necessary to change the forecast, which would be a much more likely scenario if the Fed unexpectedly holds the rate, explained the analyst.
