Wednesday’s increase marked a second consecutive daily gain, with 24K gold now Dh5 above the monthly low of Dh483.50 recorded on July 13. The 22K rate has gained Dh4.50 from its July 13 low of Dh447.75.
Gold remains below July peak
Despite the recovery, current prices remain considerably below the highest levels recorded earlier this month, giving buyers some relief compared with the first week of July.
The 24K rate began the month at Dh489.75 before climbing rapidly to Dh501.75 on July 3 and reaching a monthly high of Dh503 on July 4 and July 5. Prices then fell below Dh500 and moved unevenly through the following week before dropping to Dh483.50 on July 13.
Wednesday’s rate remains Dh14.50 below the monthly peak and Dh1.25 below the price recorded at the beginning of July.
The 22K variety followed a similar path, rising from Dh453.50 on July 1 to a monthly high of Dh466 on July 4 and July 5. Its current price remains Dh13.75 below that peak and Dh1.25 below the opening level for the month.
Cooling inflation supports gold
Gold steadied near $4,050 an ounce in global markets after advancing 1.3% during the previous session, supported by weaker-than-expected US inflation data.
US consumer prices declined in June for the first time in six years, while a closely watched measure of underlying inflation was little changed. The figures triggered a rally in government bonds as traders reduced expectations that the Federal Reserve would raise rates this month.
Swap markets placed the probability of a July rate increase at 17%, compared with nearly 50% a day earlier.
Lower interest-rate expectations tend to support gold because the metal does not offer interest or dividend income. Higher rates increase the returns available from bonds and cash deposits, raising the cost of holding non-yielding assets such as bullion.
Fed Chairman Kevin Warsh stopped short of signalling tighter policy during Congressional testimony on Tuesday, although he said interest rates remained among the tools available to bring inflation back towards the central bank’s 2% target.
Oil prices keep rate risks in focus
The fall in US inflation was helped by the largest decline in gasoline prices since 2022, offering some relief after the energy shock caused by the Iran war.
Renewed fighting and another increase in crude prices could prolong inflationary pressure, increasing the possibility that central banks keep borrowing costs elevated for longer. Such an outcome would create fresh pressure on gold through higher bond yields and a stronger US dollar.
Gold has registered a modest gain this month after losing 14% during the second quarter, its worst quarterly performance since 2013. Rising expectations of tighter Federal Reserve policy, gains in Treasury yields and a stronger dollar contributed to that decline, while bullion-backed exchange-traded funds recorded consistent net outflows.
Geopolitical risks also remained elevated after US President Donald Trump abandoned a proposed 20% charge on cargo shipments passing through the Strait of Hormuz following appeals from Gulf allies. Washington resumed its blockade of Iranian vessels and carried out strikes aimed at limiting Iran’s ability to attack commercial shipping.
– With inputs from Bloomberg.
Nivetha Dayanand is Assistant Business Editor at Gulf News, where she spends her days unpacking money, markets, aviation, and the big shifts shaping life in the Gulf. Before returning to Gulf News, she launched Finance Middle East, complete with a podcast and video series.
Her reporting has taken her from breaking spot news to long-form features and high-profile interviews. Nivetha has interviewed Prince Khaled bin Alwaleed Al Saud, Indian ministers Hardeep Singh Puri and N. Chandrababu Naidu, IMF’s Jihad Azour, and a long list of CEOs, regulators, and founders who are reshaping the region’s economy.
An Erasmus Mundus journalism alum, Nivetha has shared classrooms and newsrooms with journalists from more than 40 countries, which probably explains her weakness for data, context, and a good follow-up question.
When she is away from her keyboard (AFK), you are most likely to find her at the gym with an Eminem playlist, bingeing One Piece, or exploring games on her PS5.