Gold prices rose after weak US jobs data reduced expectations of a Federal Reserve interest rate hike.
Dubai: Gold prices in Dubai rose again on Friday morning, with 24-karat gold moving back above Dh500 after two consecutive days of gains in the international market.
At 9:52 am, 24-karat gold was priced at Dh503.50 per gram, compared with Dh494.75 on Thursday. The 22-karat variety climbed to Dh466.25 per gram, up from Dh458 the previous day.
The latest move brings Dubai gold prices back close to levels seen in the third week of June, though they remain well below the early-June peak. The 24-karat rate had reached as high as Dh538.50 on June 4 before easing later in the month, while the 22-karat variety peaked at Dh498.50 on the same day.
Prices remained elevated in the first half of June, with 24-karat gold staying above Dh520 for several sessions between June 5 and June 16. The market then cooled, slipping below Dh500 on June 23 and dropping to Dh485.25 by June 30, before recovering over the first three days of July.
Why gold is rising
Gold extended its gains over two days after weak US jobs data lowered expectations that the Federal Reserve will raise interest rates this year to control inflation.
Bullion climbed as much as 1.8% to around $4,195 an ounce after rising 2.3% in the previous session, marking its biggest gain in three weeks. The latest US labour market data indicated slower hiring in June, adding to signs of economic strain despite some recent resilience.
Weaker employment figures are expected to reduce pressure on the Fed to hike rates at its July meeting. Higher interest rates typically weigh on gold, as the metal does not generate yield.
Investors have also reduced bets on another US interest rate hike. Swap markets are now pricing in an 18% chance of a move at the next Federal Reserve meeting, down from about one-third earlier this week.
Oil prices ease
Oil prices—one of the key drivers of inflation in recent months—have also fallen closer to pre-war levels as tanker flows through the Strait of Hormuz improve.
Prices have eased this week following positive discussions in Qatar between the US and Iran aimed at turning their interim 60-day truce into a longer-term peace agreement. Lower oil prices could ease inflationary pressure, giving the Fed more room to keep rates unchanged.
Fed concerns support gold
Renewed concerns over the independence of the US Federal Reserve have also added to demand for gold.
A push by President Donald Trump to reshape the Federal Reserve has revived the “debasement trade” that helped push gold to a record high in January. Trump and his allies are reportedly exploring ways to remove members of the Fed’s Board of Governors to appoint their own nominees, according to people familiar with the matter.
Trump told CNBC on Thursday that he intends to continue pursuing the removal of Fed Governor Lisa Cook after a Supreme Court ruling allowed her to remain in office while she challenges the administration’s attempt to oust her.
