Gold prices edged higher in Dubai on Wednesday morning, with local rates returning to almost the same levels in early July despite recent market volatility driven by geopolitical tensions.
The 24K gold price was trading at Dh495.75 per gram, up from Dh492 per gram at the close of the markets on Tuesday.
Among the other variants of the yellow metal, 22K, 21K, 18K, and 14K were trading at Dh459.0, Dh440, Dh377.25 and Dh294.25 per gram, respectively.
Spot gold was trading at $4,128.12 an ounce, up 1.38 per cent. Silver was trending upward at $59.59 an ounce, up 1.35 per cent.
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Analysts say that markets continue to assess the inflationary impact of the US-Iran war.
“With Brent now trading below $89/bl, a modest pullback in oil prices and renewed hopes of diplomatic efforts between the US and Iran have provided some support to bullion after recent weakness,” said Vijay Valecha, Chief Investment Officer, Century Financial
Moreover, the Strait of Hormuz continues to be disrupted, with Yemen’s Houthis joining in on the fight and claiming a naval blockade on Saudi Arabia. This could keep energy prices elevated, Valecha said, and could sustain inflation concerns and expectations of tighter monetary policy.
“Markets are currently pricing a strong probability of a Fed rate hike by year-end, while expectations for a September hike have also increased to 64 per cent. Higher rates and a firm dollar remain key headwinds for precious metals like gold,” the analyst explained.
“Underlying demand, however, is showing some improvement. Speculative positioning in gold has risen to its highest level since early this year, while central banks purchased more than 240 tonnes in Q1, providing longer-term support despite weaker ETF demand.”
Silver, on the other hand, has regained its momentum to trade 3.5 per cent higher at $58.5. “Support for the metal lies at today’s low at $56.2, while resistance could be seen around $60.5,” Valecha said.
