UAE 24K Gold Price Climbs Dh11 to Dh484 a Gram, Up 2.3% from Tuesday.
Dubai: Gold prices surged 2.42 per cent to above $4,025 an ounce on Wednesday as the US dollar and Treasury yields declined following early midterm election results that favoured the Democrats.
Gold prices in the UAE followed the international rally. The 24K rate rose to Dh484 a gram, gaining Dh11, or 2.3 per cent, from Dh473 on Tuesday. The 22K rate climbed Dh10.25 to Dh448.25 from Dh438, while 18K gold gained Dh8.75 to Dh368.50 from Dh359.75. The 14K rate increased by Dh6.50 to Dh287.25 from Dh280.75.
Midterms weigh on the dollar
Bloomberg reports indicated that early vote counts showed Democrats leading in the races to regain control of both the Senate and the House of Representatives. Markets interpreted the results as potentially reducing the likelihood of a deficit-expanding agenda under President Donald Trump over the next two years.
Treasury yields fell across the curve, while a gauge of the US dollar weakened by as much as 0.4 per cent, marking its biggest decline in two months.
Lower yields tend to support gold because the precious metal does not pay interest. A weaker dollar also makes it less expensive for buyers using other currencies.
“The combination of a weaker USD, falling real yields and demand for protection against a potentially more unpredictable and confrontational Trump administration looks to be providing a compelling backdrop for gold buyers,” said Chris Weston, head of research at Pepperstone.
Iran talks keep gold volatile
Gold prices have fluctuated this week amid mixed signals surrounding US-Iran negotiations. Tehran and Washington are reviewing fresh proposals from mediators to avoid a return to all-out war, a diplomat briefed on the matter told Bloomberg.
Limited US airstrikes reportedly hit targets on Iran’s Qeshm Island in the Strait of Hormuz the previous night.
Oil prices had climbed over the past month amid rising tensions but reversed sharply this week as signs emerged that the White House would allow more time for diplomacy. Crude traded within a range of about $5 a barrel on Tuesday.
Gold and crude prices have largely moved in opposite directions in recent weeks. Higher energy prices can fuel inflation expectations and increase the likelihood of tighter monetary policy, putting pressure on gold, which offers no yield.
With markets adopting a wait-and-see approach, the near-term outlook for gold remains uncertain.
Tony Sage, chief executive of Critical Metals, said: “Stronger inflation signals or higher crude prices could lift yields and weigh on gold. Softer guidance from the Fed or de-escalation in the Middle East that can push oil down may help stabilise the metal and let central-bank demand drive a recovery.”
