Gold prices in Dubai are rising: 24-karat jewelry trades at Dh523.25

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 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.'