Dubai gold prices rise, with 24k reaching Dh497 as global rates hover around $4,100.
Dubai: Gold prices in Dubai edged higher on Wednesday morning as markets remained sensitive to shifts in interest-rate expectations, movements in the US dollar and renewed tensions surrounding the Strait of Hormuz.
Investors continued to monitor global developments closely, with monetary policy signals and geopolitical uncertainty influencing the direction of bullion prices.
The price of 24-karat gold stood at Dh497 per gram, rising from Dh493.50 on Tuesday, while 22-karat gold increased to Dh460.25 from Dh457.
The latest move followed a week of modest but noticeable fluctuations in Dubai’s jewellery market as traders continued to track global economic signals and geopolitical developments.
Gold prices began July at Dh489.75 per gram for 24-karat and Dh453.50 for 22-karat in Dubai before gaining momentum during the first weekend of the month. The 24-karat rate climbed to Dh503 on July 4 and July 5, while 22-karat gold reached Dh466 on both days.
Prices then eased to Dh499 on Monday and declined further on Tuesday before making a modest recovery on Wednesday.
Fed signals remain in focus
International gold prices traded within a narrow range, with spot bullion hovering near $4,100 an ounce after falling 1.4% in the previous session.
Investors are closely watching the minutes from the Federal Reserve’s June meeting, due later Wednesday, for further clues on the outlook for US interest rates and how long borrowing costs may remain elevated.
Bullion faced pressure following the Federal Reserve meeting, after new Chair Kevin Warsh adopted a more hawkish stance than investors had anticipated. However, weaker-than-expected jobs data released last week reduced confidence in an immediate rate cut, helping gold recover and move back above the $4,000-an-ounce mark.
Higher interest rates typically weigh on gold prices because the metal does not generate interest income, while a stronger US dollar can make bullion more expensive for buyers holding other currencies.
Iran strikes add inflation risk
Renewed US military action in the Gulf has added fresh uncertainty to global commodity markets. US Central Command said it carried out “powerful strikes” in response to Iranian attacks on shipping in the Strait of Hormuz, shortly after Washington revoked a waiver that had allowed Tehran to sell oil internationally.
Crude oil prices moved higher following the announcement, raising concerns that rising energy costs could add to inflation pressures and make it more difficult for the Federal Reserve to cut interest rates in the near term.
The situation has left gold caught between two opposing forces — increased safe-haven demand due to geopolitical uncertainty and pressure from higher borrowing costs, which typically weigh on non-yielding assets.
Central banks continue buying
Gold has fallen by more than a fifth since the Iran war began in late February, as profit-taking brought an end to a three-year rally and pushed the metal into a bear market last month. However, there are limited signs that investors are building significant short positions in anticipation of further declines.
China’s central bank increased its gold holdings in June, extending its longest buying streak since at least 2015. The latest survey by the World Gold Council also showed that a record proportion of central banks expect to increase their gold reserves over the next year, highlighting continued official-sector demand as an important source of support during periods of market volatility.
