Gold prices in Dubai fell; 18K pure gold dropped below 400 dirhams per gram

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.

Gold prices in Dubai showed a recovery on Tuesday morning amid the weakening US dollar and investors' search for investment directions.

According to data from Dubai Jewellery Group, the price of 24K gold reached 534.75 dirhams per gram at the market opening on Tuesday, showing an increase compared to the price of 530.75 dirhams per gram on Monday.

Similarly, prices for 22K, 21K, 18K, and 14K gold also increased on Tuesday, trading at rates of 495.0, 474.75, 407.0, and 317.5 dirhams per gram, respectively.

Spot gold rose by half a percent on Tuesday morning, reaching the mark of $4432 per ounce. Silver also demonstrated an upward trend, trading almost one percent higher at $66.93 per ounce.

Chris Weston, Head of Research at Pepperstone, noted that precious metal remains in a battle between buyers and sellers, as neither side shows enough confidence to ensure a stable and sustained movement in the price of gold.

However, Weston added that several factors point to a moderate risk bias towards growth, which could lead to retesting the $4500 level and last week's highs. A significant signal remains the Shanghai gold futures, especially after the announcement that the People's Bank of China (PBoC) added about 630,000 ounces of gold to its reserves in its latest purchase. This continues the accumulation program for the twenty-second consecutive month and is the largest monthly purchase since 2023.

In Weston's opinion, changes in Shanghai gold futures may have a significant impact on CME futures and spot gold. Thus, ongoing purchases by the state sector provide another potential catalyst for growth. Furthermore, there is limited demand for forming long positions on the US dollar ahead of the release of US PPI data and, importantly, the release of the main US Consumer Price Index on Friday.

Weston believes that for a significant change in the views of individual members of the Federal Reserve at the upcoming meeting, a major surprise regarding inflation will be required at this stage.