Dubai woke up to stable gold prices on Wednesday morning, following a slight decrease of half a dirham per gram on Tuesday. The 24K variant, the most popular, sat at Dh280.75 per gram as of 9 am UAE time. Other varieties followed suit, with 22K, 21K, and 18K priced at Dh260, Dh251.75, and Dh215.75 per gram, respectively.
Analysts attribute the current stability to a combination of factors. Terence Hove, a senior financial market strategist at Exness, explains that after reaching a peak in early April, gold prices have been undergoing a correction period.
However, recent US jobs data (NFP) has fueled speculation of an interest rate cut by the Federal Reserve (Fed) as early as September.
“Lower interest rates are generally seen as positive for gold,” says Hove. “While traders remain cautious, waiting for further pronouncements from the Fed, expectations of an easing cycle could buoy gold prices. However, a hawkish tone from the Fed could strengthen the US dollar, putting downward pressure on gold.”
Another factor supporting gold prices is central bank purchases. “Central banks have been net buyers for a while now,” Hove observes. “While this buying continues, the declining volume raises some concerns. Geopolitical tensions in the Middle East also add to the volatility. Escalating tensions could trigger a flight to safe-haven assets like gold, pushing prices up. Conversely, progress towards a ceasefire could dampen prices.”
