On Tuesday, 24-karat gold remained below the Dh500 mark, trading at Dh496.75.
Dubai: Gold prices continued their downward trend as traders assessed the impact of a stronger US dollar and higher Treasury yields on the Federal Reserve’s interest-rate outlook. Spot gold hovered around $4,140 an ounce, while the dollar approached its strongest level of the year on Monday.
The euro also weakened following a selloff in French bonds, prompting traders to watch for potential spillover effects across the region. A stronger dollar typically puts pressure on commodities priced in the US currency, including gold.
In the UAE, some shoppers are holding back on purchases in anticipation of a further decline in prices. On Tuesday, 24-karat gold remained below the Dh500 mark at Dh496.75 per gram, while 22-karat gold traded at Dh460. Meanwhile, 18-karat gold slipped to Dh378 per gram, and 14-karat gold was priced at Dh294.75 per gram.
Despite signs that inflation remains persistent, Federal Reserve officials have played down the prospect of an imminent interest rate increase. Markets are currently pricing in around a 25% chance of a rate hike at the central bank’s meeting this month.
Investors are now awaiting the minutes from the Fed’s September meeting, when the central bank raised rates for the first time in three years. Higher interest rates tend to put pressure on gold and other precious metals, as they increase the appeal of yield-bearing assets such as US Treasuries.
Gold faces near-term pressure
The short-term outlook for gold, however, remains challenging.
“The key driver of sentiment and flows continues to look heavy and remains in a short-term downtrend. Rallies are quickly being sold, and sellers remain firmly in control,” said Chris Weston, Head of Research at Pepperstone.
Weston continues to view the current environment as a seller’s market, suggesting that the near-term outlook could improve if gold breaks above a key level.
“Unless we see a break above 4,275, we can become more constructive on the near-term upside,” he said.
Gold down more than 20% since Middle East crisis
Gold fell more than 6 per cent last month as investors assessed the inflationary impact of higher energy prices alongside expectations of elevated US interest rates and a stronger dollar. The precious metal has now declined by more than 20 per cent since the US-Iran conflict began in late February.
Spot gold was trading lower at $4,120.38 an ounce at 10am Dubai time. Silver also declined to $60.46 an ounce, while platinum edged lower and palladium recorded a marginal gain.
Meanwhile, the Bloomberg Dollar Spot Index, which measures the US currency against a basket of major peers, was little changed after posting gains for four consecutive weeks.
