Dubai gold softens as 24K drops to Dh491.75 following a volatile global week.
Dubai: Gold prices in Dubai extended their decline on Thursday morning, pushing 24-karat gold below the Dh500 mark and offering jewellery buyers another price adjustment following a volatile start to June.
The 24-karat gold variety was priced at Dh491.75 per gram at 9:18 am on Thursday, down from Dh492.50 on Wednesday, while 22-karat gold stood at Dh455.25 per gram, compared with Dh456 a day earlier.
The latest decline marks a sharp pullback from earlier levels this month, when 24-karat gold opened June at Dh539.75 per gram and 22-karat stood at Dh500. Prices later climbed to Dh542.50 and Dh502.25 on June 2, before easing to Dh536 and Dh496.25 on June 3. The month’s peak came on June 4, when 24-karat gold reached Dh538.50 and 22-karat touched Dh498.50.
Prices remained above Dh520 for several days thereafter, with 24-karat gold at Dh522.50 on June 5 and Dh521.75 on June 6 and 7. The downward trend accelerated this week, with 24-karat slipping to Dh514.25 on June 9 before falling below Dh500 on June 10. The overall decline leaves prices nearly Dh48 per gram lower for 24-karat gold compared to the start of the month.
Buyers get a lower entry point
The drop below Dh500 is likely to attract interest from UAE residents planning jewellery purchases, particularly those monitoring prices for weddings, gifting, and summer travel. The decline follows several sessions of global volatility, with gold responding to renewed geopolitical tensions, stronger US economic data, and shifting expectations around interest rates.
Internationally, bullion saw volatile trading after the US carried out a new round of strikes against Iran, adding pressure to markets already worried about energy supplies and inflation. Iran’s move to close the Strait of Hormuz to all vessels further heightened concerns over oil flows, keeping inflation expectations elevated.
Gold initially found support from heightened geopolitical risk, but that backing has since eased as investors shift focus toward US interest rate outlooks and dollar movements.
US data weighs on gold
Ahmad Assiri, Research Strategist at Pepperstone, said gold’s weakness reflects a shift in how markets are interpreting current risks.
“Gold’s weakness reflects a fundamental shift in what markets are choosing to price. Rather than a singular focus on geopolitical uncertainty surrounding the Strait of Hormuz, investors are increasingly reacting to the prospect of tighter US monetary policy, given the recently strong non-farm payrolls (NFP) figure as well as a CPI print well above the 4% mark,” he said.
The latest US inflation data showed consumer prices rising 4.2% year-on-year in May, the fastest pace since 2023, with higher energy prices adding further pressure. This has made investors more cautious on gold, which typically struggles in environments of firm yields and a stronger dollar.
Assiri added that the inflation reading has reinforced expectations that the Federal Reserve will maintain a restrictive policy stance.
“Energy-led inflation is now elevated enough to reinforce the case for the Federal Reserve to maintain a restrictive monetary policy stance. While the data did not deliver an upside surprise, it continues to support the view that policymakers may need to keep interest rates high, with the possibility of a rate hike this year.”
Higher interest rates typically reduce gold’s appeal because the metal does not offer a yield, while a stronger US dollar also makes bullion more expensive for buyers using other currencies.
Hormuz risk feeds inflation fears
The latest escalation in the Middle East is being interpreted differently by markets. Instead of generating sustained safe-haven demand for gold, the risk of disruption in the Strait of Hormuz is primarily feeding inflation concerns through higher energy prices.
Assiri said this dynamic has become counterproductive for bullion.
“The re-escalating conflict in the Middle East has become a clear source of inflationary concern, and the longer the risk of disruption to shipping through the Strait of Hormuz persists, the greater the pressure on global energy prices.”
He added that investors have shifted focus away from traditional safe-haven demand toward concerns that higher inflation could keep the Federal Reserve on a restrictive path or even revive expectations of further rate hikes.
What shoppers should watch next
Gold is currently trading close to the psychologically important $4,000 per ounce level in global markets, after falling about 25% from late February highs. Assiri said a sustained recovery would likely require either a shift in US economic data or a meaningful easing of geopolitical tensions.
“While some market participants continue to monitor the $4,100 region as an important technical level, a sustained recovery is likely to require either a significant reassessment of US economic data or a material de-escalation in geopolitical tensions.”
Dubai shoppers are likely to continue experiencing frequent price fluctuations in the near term, as global gold markets react to movements in oil prices, US inflation data, Federal Reserve signals, and developments in the Middle East. The recent decline offers buyers a lower entry point compared to earlier this month, but the market remains highly sensitive to sudden shifts.
