24K gold climbs to Dh531.25 as 22K reaches Dh492 ahead of key US inflation data.
Dubai: Gold buyers in Dubai are facing their highest prices in more than two months as the precious metal extended its rapid August rebound, with 24-karat gold reaching Dh531.25 per gram on Tuesday.
The 24K gold rate rose by Dh3 from Dh528.25 on Monday to Dh531.25 per gram, while 22K gold also gained Dh3, reaching Dh492 from Dh489.
Tuesday’s move pushed 24K gold to its highest level since June 4, when it stood at Dh538.50, according to 90-day price data. The latest rate is also Dh45.75 higher than the Dh485.50 recorded on August 3.
The 22K rate has followed a similar trajectory, rising Dh42.50 from Dh449.50 on August 3 to Dh492 on Tuesday.
August rebound gathers pace
The latest increase extends a sharp recovery in Dubai gold prices after 24K gold spent much of July below Dh500 per gram.
Prices fell to Dh481.50 on July 17 before rebounding to Dh500.75 on July 22, then easing back to Dh485.25 by July 31.
The recovery accelerated in August, with 24K gold rising from Dh492.25 on August 4 to Dh514 on August 5 and Dh523.75 by August 7. It climbed to Dh528.25 on Monday before reaching Dh531.25 on Tuesday.
Despite the recent gains, the current 24K rate remains below the 90-day high of Dh563.75 recorded on May 14.
Global gold moves above $4,400
The rise in Dubai gold prices comes as international bullion also gained momentum, climbing above $4,400 an ounce to a two-month high on Tuesday.
Gold rose as much as 1 per cent during the session after gaining 3.6 per cent over the previous two trading days. Buying strengthened after bullion moved above its 100-day moving average on Monday, while recent demand has also been supported by dip-buying and increased inflows into gold-backed exchange-traded funds in China.
Ahmad Assiri, Research Strategist at Pepperstone, said the latest rally was being driven primarily by renewed investor flows and a shift in market sentiment following a period of relatively narrow trading ranges.
“Gold prices moved higher in early session trading beyond the $4,400 an ounce range, with the latest move appearing to be driven primarily by renewed flows into the metal and a notable shift in market sentiment,” Assiri said.
He said investors appeared to be rebuilding their exposure to gold, helping prices recover quickly, while geopolitical developments remained part of the broader market backdrop.
“What stands out in the recent price action is the strength of these flows after a period of relatively tight ranges, and investors appear to be rebuilding exposure to gold, allowing prices to regain ground relatively quickly.”
Ahmad Assiri, Research Strategist at Pepperstone
Flows take the lead
Assiri said tensions around the Strait of Hormuz and uncertainty surrounding the broader US-Iran situation continued to influence markets, although recent gold price movements suggested investor flows were exerting a stronger influence.
“However, the magnitude of the latest gold move suggests that flows are currently having the greater influence on prices,” he said.
“If this change in sentiment continues to attract further flows, it could remain an important factor in determining whether gold can consolidate around $4,400 and potentially extend its recovery towards higher levels.”
Central bank purchases have also supported bullion in recent weeks, helping gold remain above the $4,000-an-ounce level following its earlier weakness.
US inflation data in focus
Market attention is now turning to US consumer price inflation data due on Wednesday, which could influence expectations for the Federal Reserve’s next interest-rate decision.
The inflation reading comes after weaker US employment data released last week, as Federal Reserve policymakers continue to assess whether interest rates need to remain elevated to bring inflation back towards the central bank’s 2 per cent target.
Higher interest rates can weigh on gold because the metal does not generate interest, while expectations of lower borrowing costs can make bullion relatively more attractive to investors.
Geopolitical developments are also in focus after US President Donald Trump hardened his position on Iran on Monday, reducing expectations of an agreement that could reopen the Strait of Hormuz and bring the months-long conflict to an end.
Assiri said Brent crude was also moving towards the upper $80s per barrel, although oil remained more directly exposed to developments surrounding the Strait of Hormuz.
“As of now, the two markets are responding to the same broader environment, but gold is being driven primarily by strong investor flows and a notable improvement in sentiment, while oil remains more closely tied to headline risk,” he said.
