Gold prices dipped slightly in Dubai and UAE on Friday morning.
According to Dubai Jewellery Group data, the 24K and 22K variants of the precious metal were trading at Dh522 and Dh483.5 per gram, respectively, when market opened on Friday morning.
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The 24K gold price has dropped nearly Dh38 per gram since August 25.
Among the other variants, 21K, 18K and 14K dipped to Dh463.5, Dh397.25 and Dh310 per gram, respectively.
Spot gold was trading at $4,331 an ounce, down 0.8 per cent. Silver slipped 1.1 per cent to $63.6 an ounce.
Simon-Peter Massabni, head of business development at xs.com, said gold is experiencing a sharp correction during Thursday’s session, pressured by a stronger US dollar, rising Treasury yields, and growing expectations that the Federal Reserve will maintain a restrictive monetary policy stance.
“One of the main factors behind the decline has been the rebound in US Treasury yields. The 10-year Treasury yield moved back toward 4.90 per cent. In contrast, longer-term yields remained under pressure after the US government’s plan to repurchase up to $6 billion in longer-dated debt fell short of what some market participants had expected. Higher yields increase the opportunity cost of holding gold, an asset that does not generate interest.
“The dollar also regained ground against major international currencies after recently trading near two-week lows. The combination of higher yields and expectations that interest rates will remain elevated has once again increased the relative attractiveness of dollar-denominated assets. For gold, a stronger dollar is generally a negative factor because it makes the metal more expensive for investors using other currencies,” he said.
Adding to these pressures is the sharp rise in oil prices. Brent crude once again surpassed the $100-per-barrel threshold and traded above $105 during the session, while WTI also moved above $100.
Geopolitical tensions and risks to energy supplies in the Middle East continue to drive prices higher, while simultaneously increasing concerns about a renewed wave of inflation linked to energy costs.
“The oil rally creates a complex environment for gold. Although geopolitical tensions normally support demand for safe-haven assets, oil remaining persistently above $100 could force major central banks to keep interest rates elevated for longer. In the short term, this effect is outweighing safe-haven demand, generating additional pressure on precious metals,” he added.
Source: Khaleej Times