Gold retreats after a three-month high as investors await US inflation data and Fed signals.
Dubai: Gold prices edged lower on Tuesday after bullion climbed to its highest level in more than three months, offering UAE shoppers a slight reprieve following last week’s sharp rally.
The 24K rate slipped to Dh557.50 per gram from Dh558 at Monday’s close, while 22K gold remained unchanged at Dh516.25 per gram.
The move comes as investors await key US inflation data and a closely watched speech from Federal Reserve Chair Kevin Warsh later this week. Renewed US-Iran tensions are also keeping gold’s safe-haven appeal in focus.
Gold cools
International spot gold eased to around $4,640 an ounce on Tuesday after earlier climbing to its highest level in more than three months, as investors turned their attention to upcoming US inflation data and Federal Reserve policy signals.
The precious metal has remained strongly supported after the US Treasury announced plans to at least double its buybacks of longer-dated government debt. The move pushed Treasury yields lower and contributed to renewed demand for gold amid concerns over the US fiscal outlook and the potential impact on the dollar.
The move has revived concerns over US fiscal policy, inflation and the future strength of the dollar — factors that can support demand for gold.
“Gold’s latest moves look like consolidation after a very strong run,” Bloomberg quoted Charu Chanana, chief investment strategist at Saxo Markets, as saying.
For UAE shoppers, Tuesday’s dip does not necessarily point to a broader reversal. Instead, the move may reflect a pause after gold’s rapid recent gains.
IG market analyst Tony Sycamore told Reuters that any dips could attract buyers, with gold potentially testing resistance in the $4,900-$5,000 an ounce range.
TD Securities expects gold to remain supported in the coming weeks amid concerns over potential US dollar debasement, although it warned that higher interest rates could eventually put pressure on the metal.
India rates
Gold prices in India also eased on Tuesday, following recent gains. The latest rates stood at ₹16,375 per 10 grams for 24K gold, down from ₹16,396 on Monday.
24K gold:
- Today: ₹16,375 per 10g
- Yesterday: ₹16,396 per 10g
- Change: down ₹21 per 10g
22K gold:
- Today: ₹15,010 per 10g
- Yesterday: ₹15,030 per 10g
- Change: down ₹20 per 10g
The Indian market is showing a similar pattern to Dubai, with gold prices easing modestly after a strong recent rally.
Fed watch
The next major trigger for gold could come from the US, with investors awaiting the Personal Consumption Expenditures (PCE) inflation report, the Federal Reserve’s preferred inflation gauge, due on Wednesday. The data could influence expectations for the Fed’s interest-rate path and, in turn, the direction of gold prices.
Investors are also watching Federal Reserve Chair Kevin Warsh’s debut speech at the annual Jackson Hole symposium later this week for clues on the central bank’s policy outlook. Markets are particularly focused on how the Fed may respond to persistent inflation and elevated bond yields.
This matters for gold because the metal does not generate interest or other income. Higher interest rates can therefore make yield-bearing assets more attractive relative to gold, potentially weighing on demand.
Conversely, concerns over persistent inflation, a weaker dollar or rising fiscal risks can boost gold’s appeal as a store of value. The combination of the upcoming US inflation data and Warsh’s Jackson Hole remarks could therefore set the tone for gold in the near term.
Geopolitical risk
Gold is also finding support from renewed geopolitical uncertainty. Iran has vowed to retaliate after the US expanded economic sanctions, raising concerns about further escalation and its potential impact on global markets.
The latest developments follow Washington’s warning that countries continuing to do business with Iran could face secondary sanctions. The heightened uncertainty surrounding the Middle East, alongside broader trade tensions, is reinforcing demand for traditional safe-haven assets such as gold.
Investor participation has also been strengthening. Bloomberg reported that gold-backed exchange-traded funds added more than 28 tonnes last week, their biggest weekly increase since January, suggesting that the recent rally is attracting broader investor interest.
For UAE gold shoppers, the message is straightforward: Tuesday’s modest decline does not erase the broader rally. Gold remains near recent highs, and the next major market catalysts — US inflation data and Federal Reserve signals — could determine whether prices resume their climb or see a deeper pullback.
