The precious metals sector is experiencing an extended period of consolidation following a strong run-up earlier this year. Gold prices edged up in Dubai at the market opening on Wednesday, increasing by nearly Dh2 per gram over the past 24 hours.
In the UAE, the 24K variant of the yellow metal opened at Dh282.0 per gram at 9am local time, compared to Dh281.75 per gram at Tuesday’s market close. The price had gained Dh1.75 per gram the previous day. On Wednesday, the 22K variant traded at Dh261.0, 21K at Dh252.75, and 18K at Dh216.75 per gram, respectively. Globally, gold remained steady at $2,327.64 per ounce as of 9:07am UAE time, with softer-than-expected US retail data boosting hopes for a Federal Reserve interest rate cut this year.
Ole Hansen, head of commodities strategy at Saxo Bank, noted that the precious metals sector is undergoing a consolidation phase, giving traders and investors time to adjust to new and higher levels after the earlier surge.
“After two unsuccessful attempts to establish support above $2,400, gold has mostly seen daily closes within a $2,280 to $2,380 range since early April. The most significant setback occurred when data revealed that the People’s Bank of China paused their purchases in May after 18 months of continuous buying,” Hansen explained.
Naeem Aslam, chief investment officer at Zaye Capital Markets, suggested that gold prices might test the $2,300 support level in the coming days, as the bulls appear to be struggling to maintain their position.
“A break of the major support without any new buyers at that level could push the price further down towards the next significant level of $2,150,” he added.
