Precious metal investors remain cautious about taking major positions as elevated US Treasury yields and uncertainty over the Federal Reserve’s policy outlook continue to weigh on sentiment.
Gold prices remained steady in Dubai on Friday morning as investors weighed expectations of US interest rate moves against the backdrop of the US-Iran military conflict.
The price of 24K gold stood at Dh495.75 per gram, slightly higher than Thursday’s market close of Dh495.25 per gram.
Other gold categories were also trading at stable levels, with 22K, 21K, 18K and 14K priced at Dh459, Dh440.25, Dh377.25 and Dh294.25 per gram, respectively.
Globally, spot gold was trading at $4,117.95 an ounce, down 0.34 per cent, while silver prices also edged lower, trading at $60.24 an ounce, a decline of 0.13 per cent.
Ahmad Assiri, research strategist at Pepperstone, said gold’s recovery has lost momentum after a brief rally, with the market returning to a more cautious outlook.
“The renewed escalation in geopolitical tensions around the Strait of Hormuz has affected broader market sentiment, pushing gold back towards the $4,100 level. At the same time, crude oil prices have risen as markets factor in a higher risk of supply disruptions and potential inventory shortages,” he said.
Assiri added that precious metal investors remain hesitant to take strong long positions as US Treasury yields stay elevated and uncertainty over the Federal Reserve’s policy direction continues.
“Higher energy prices resulting from renewed tensions could slow the global disinflation process and keep yields elevated. While markets have slightly lowered expectations of further rate hikes in the near term, yields remain high enough to limit gold’s attractiveness in the current environment,” he said.
According to Assiri, gold’s medium-term outlook remains positive compared with the heavy selling pressure seen in recent weeks, although the near-term trend remains cautious. The market has moved away from expectations of a decline towards the $3,900 level but still lacks a strong catalyst for a sustained move above $4,200.
“Much of the uncertainty is linked to the Federal Reserve and renewed geopolitical risks. Until markets gain more clarity on the path of US interest rates, gold is likely to remain caught between geopolitical support and the pressure from elevated yields,” he concluded.
