Gold prices in Dubai dip; 22K drops to nearly Dh490 per gram

Gold prices in Dubai slipped at the start of the week as investors waited for key US inflation reports due later in the week. The 24-karat variety opened at Dh530 per gram on Monday, down from Dh533.75 at Friday’s close.

The Dubai Jewellery Group listed 22-karat gold at Dh490.75 per gram, while 21-karat, 18-karat and 14-karat gold traded at Dh470.50, Dh403.25 and Dh314.50 respectively. Globally, spot gold stood at $4,402.40 an ounce, down 0.53% at 9:11 a.m. UAE time. Silver also fell 0.53%, to $65.83 an ounce.

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Federal Reserve Governor Christopher Waller indicated that he would favor keeping interest rates unchanged if inflation continues to moderate. This has reduced expectations of an imminent rate hike, although markets still price roughly a 50 per cent chance of a Fed hike later this month.

Vijay Valecha, chief investment officer at Century Financial, said gold had received support from changing expectations for US monetary policy. Federal Reserve Governor Christopher Waller indicated he would favor leaving interest rates unchanged if inflation continued to moderate, Valecha said. Markets still priced roughly a 50% chance of a Federal Reserve rate hike later in the month.

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On the other hand, stronger labor market data could revive rate-hike expectations and trigger some profit-taking. With next week’s inflation data also in focus, volatility is likely to remain elevated.

The analyst identified the nonfarm payrolls report as the main near-term catalyst. Weaker-than-expected payrolls could reinforce expectations of a pause and support gold, while stronger labor data could revive rate-hike expectations and prompt profit-taking. With inflation data also in focus the following week, Valecha said volatility was likely to remain high.

Simon-Peter Massabni, head of business development at XS.com, said gold remained under defensive pressure, but uncertainty over the US interest-rate path and elevated geopolitical risks continued to support its fundamentals. He said the pullback should not yet be read as the start of a new bearish trend, describing it instead as a corrective move and a period of repositioning before the US data releases.

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For now, I see it more as a corrective move and a period of repositioning ahead of the release of the U.S. data.