Gold surges above $4,600 as investors await US inflation data and Fed signals.
Dubai: Gold prices rose on Monday as the global bullion rally gathered pace, with a weaker US dollar and renewed concerns over US fiscal policy encouraging investors to seek the precious metal as a safe-haven asset.
Gold climbed above $4,600 an ounce and reached its highest level in more than three months, with spot prices trading around $4,641. Investors are now watching upcoming US inflation data and a speech by Federal Reserve Chair Kevin Warsh for clues about the future path of interest rates.
In Dubai, 24-carat gold rose to Dh558.25 per gram on Monday, up from Dh554.75 on Sunday. The 22-carat rate also climbed, reaching Dh516.75 per gram, compared with Dh513.75 a day earlier.
This puts the 24K rate Dh3.50 higher per gram, while 22K gold has increased by Dh3 per gram compared with Sunday’s closing prices.
For shoppers, that means 10 grams of 24K gold would now carry a metal value of around Dh5,582.50, before making charges, taxes and any additional retailer fees.
Why gold is rising
The latest rally in gold is being driven largely by a weaker US dollar, which makes the metal more affordable for buyers holding other currencies. Spot gold climbed to $4,641.27 an ounce on Monday, its highest level since May 15, after gaining more than 5 per cent last week.
Tim Waterer, chief market analyst at KCM Trade, told Reuters that gold was “looking sprightly” at the start of the week, with the softer dollar providing much of the momentum. Investors are also assessing what elevated bond yields could signal about underlying economic pressures and policy uncertainty.
The next major test for bullion is likely to come later this week, when markets receive the July Personal Consumption Expenditures (PCE) price index — the Federal Reserve’s preferred inflation gauge — and Fed Chair Kevin Warsh addresses the Jackson Hole economic symposium. Investors will be watching both for clues about the US interest-rate outlook.
Waterer said traders would be watching closely for any shift in the Federal Reserve’s policy tone. A balanced or cautious message that leaves room for flexibility could help gold extend its recent gains, particularly if investors interpret it as supportive of a less restrictive interest-rate outlook.
24K: Today: Dh558.25/g; yesterday: Dh554.75/g; change: +Dh3.50/g.
The 22K gold rate in Dubai rose to Dh516.75 per gram, up Dh3 from the previous day. The international gold price was at $4,638.02 an ounce at 8.59am, gaining $22.30, or 0.48 per cent.
The rise in Dubai prices comes as gold continues to rally globally, with spot bullion reaching a more than three-month high amid a weaker US dollar and expectations around upcoming US inflation data and Federal Reserve policy signals.
India gold prices
Gold prices also moved higher in India, tracking the international rally. On Monday, the 24K rate stood at around ₹16,396 per gram, up from ₹16,309 on Sunday, while 22K gold rose to ₹15,030 per gram from ₹14,950.
The gains come as Indian gold prices extend their recent upward trend, with investors watching US inflation figures and upcoming comments from Fed Chair Kevin Warsh for clues on the interest-rate outlook.
22K: Today: ₹150,300/10g; yesterday: ₹149,500/10g; change: +₹800
The Indian market is therefore seeing a similar upward move to Dubai, reflecting the strength of international bullion prices.
What markets are watching
Gold’s latest rally has been supported by renewed concerns over the US fiscal outlook after the Treasury announced a surprise increase in buybacks of long-dated government debt. The move helped push the dollar lower and revived investor concerns about the long-term value of the currency, boosting gold’s appeal as a store of value.
Investors are also watching US interest-rate signals closely, with upcoming inflation data and Federal Reserve Chair Kevin Warsh’s comments at the Jackson Hole symposium likely to influence the next move in bullion. A softer policy tone could provide further support for gold.
Bloomberg reported that gold-backed exchange-traded funds attracted more than 28 tonnes of inflows last week, marking their strongest weekly inflow since January. The renewed demand suggests broader investor participation is supporting the rally.
Christopher Wong, a strategist at Oversea-Chinese Banking Corp, said the wider participation was encouraging and that gold could have further room to rise, although some consolidation after the recent sharp gains would be healthy.
The main near-term risks, Wong said, are a renewed increase in real yields or the US dollar, both of which can reduce gold’s appeal.
Justin Lin, an analyst at Global X ETFs, also sees scope for stronger investor allocations to precious metals as concerns about currency debasement continue to support demand. Global X has previously highlighted continued investor interest in gold ETFs and the role of a weaker US dollar and geopolitical risks in supporting the metal.
Geopolitical tensions are adding another layer of uncertainty. The US has threatened Iran with what it called the “greatest financial offensive ever marshalled” as Washington prepares sanctions targeting Iran’s trade partners. Oil prices slipped by more than $1 a barrel as investors took profits ahead of the expected announcement.
