24K Gold Drops Dh40 in 28 Days, Falling from Dh554.50 on August 27 to Dh514.50 on Friday.
Dubai: Gold prices are heading towards a weaker end to the week as elevated energy costs and inflation concerns push bond yields higher and strengthen expectations of another US Federal Reserve interest rate hike.
In the UAE, 24-karat gold remained unchanged at Dh514.25 per gram compared with the previous day’s close.
Over the past 28 days, however, gold prices have fallen sharply. The price of 24-karat gold stood at Dh554.50 per gram on August 27, representing a decline of more than Dh40 in nearly a month.
As of Friday, 22-karat gold in Dubai was trading at Dh476.25 per gram, while 14-karat gold stood at Dh305.25 per gram, moving closer to the Dh300 mark.
External factors weighing on gold
Gold edged higher on Friday, moving closer to $4,300 an ounce, although it remained around 2 per cent below its level from the previous Friday.
Oil prices, meanwhile, eased after gaining more than 7 per cent over the previous two sessions. The pullback came amid reports that negotiators were considering a phased arrangement under which Iran would reopen the Strait of Hormuz in exchange for the US lifting its port blockade.
Gold’s recent price movements have largely followed changes in energy markets and growing expectations of further interest rate increases by the US Federal Reserve. Higher borrowing costs typically put pressure on bullion because gold does not generate interest or yield.
Demand remains resilient
“Gold remains comfortably above the June-July lows near $4,000, despite a substantial deterioration in its traditional macro drivers. More importantly, there has so far been little evidence of the kind of investor liquidation that would normally accompany such a sharp rise in real yields,” said Ole Hansen, Head of Commodity Strategy at Saxo Bank.
Hansen also pointed to resilient demand from China as another factor that could continue to provide support for gold prices.
Despite near-term pressures, many investors continue to expect gold to move gradually higher as the precious metal regains its traditional role as a portfolio hedge.
Spot gold edged up 0.02 per cent to $4,263.34 an ounce at 9.30am in Dubai. Silver rose 0.01 per cent to $63.55 an ounce, although it remained on course to finish the week more than 3 per cent lower.
Platinum also moved slightly higher, while palladium declined. The Bloomberg Dollar Spot Index, which tracks the performance of the US currency, was broadly unchanged following five consecutive days of gains.
