Gold prices in Dubai showed relative stability, losing 9.25 dirhams over one week. Investors are assessing the impact of oil price fluctuations and the likely interest rate hike by the Federal Reserve.
24-karat gold traded at 517 dirhams per gram at the opening of markets on Thursday, which was higher than 516.25 dirhams during Tuesday's session. Other varieties, including 22K, 21K, 18K, and 14K, cost 478.75, 459, 393.5, and 306.75 dirhams, respectively.
Globally, the spot price of gold was $4291.3 per ounce, showing a 0.2 percent increase according to UAE time at 9:00 AM. Silver dropped by 0.25 percent, trading at $64.28 per ounce.
Financial analyst and Director of Investments at Century Financial, Vijay Valecha, noted that the precious metal has become more sensitive to recent changes in oil prices. Investors are deciding whether high energy prices will be high enough to maintain inflationary pressure and thus lead to further Fed rate hikes.
The analyst explained that since higher borrowing costs usually weaken the case for holding gold, as the metal does not yield interest, its attractiveness as a portfolio hedge remains strong due to strong inflows into gold ETFs and demand from central banks, despite rising real yields in the US and the dollar's power limiting immediate profits.
From a technical perspective, gold has recovered, finding support from the 200-day Exponential Moving Average (EMA) around the $4320 level, continuing its movement within the established range since the beginning of the month, Valecha explained.
He added that a decisive close below this level is necessary to confirm a short-term downtrend, with the next potential support possibly being near the $4261 level, determined by the upward trend line connecting the lows of July 17, July 29, August 3, and September 16.
Valecha also reported that silver shows a similar technical profile and will need to decisively break above the $67.50 level from recent highs to potentially trigger a buying impulse. The 200-day EMA is around $65.56, and yesterday's lows were close to $64.56, providing short-term support.