Dubai Gold Prices Slide as Dollar Strengthens and Fed Hints at Steady Rates
Gold prices in Dubai have continued their decline, influenced by a stronger US dollar and rising Treasury yields. Spot gold is currently trading around $4,140 per ounce, while the dollar neared its strongest level of the year on Monday. In the UAE, 24-karat gold is priced at Dh496.75 per gram, with 22-karat at Dh460, 18-karat at Dh378, and 14-karat at Dh294.75. Traders are holding off on purchases, anticipating further price drops.
Despite ongoing inflation, Federal Reserve officials have downplayed the likelihood of a near-term rate hike. Markets currently assign a 25% probability to a rate increase at the Fed's upcoming meeting. The minutes from the Fed’s September meeting, where it raised rates for the first time in three years, are set to be released tomorrow. Higher interest rates typically reduce demand for gold as they boost the appeal of yield-generating assets like US Treasuries.
Analysts remain cautious about gold's short-term prospects. Chris Weston, Head of Research at Pepperstone, noted that sentiment and flows are heavily weighted towards a downtrend, with rallies being quickly sold. He suggested that a break above $4,275 would be needed to shift the near-term outlook positively.
Gold has seen a significant decline, dropping over 20% since the US-Iran conflict began in late February. Spot gold is now trading at $4,120.38 per ounce, while silver has fallen to $60.46 per ounce. Platinum has also slipped, though palladium showed a slight gain. The Bloomberg Dollar Spot Index has recorded four consecutive weeks of gains, further pressuring commodity prices.