Gold prices went up again in Dubai’s markets on Tuesday morning, after dropping on Monday. Data from the Dubai Gold and Jewellery Group showed that 24 karat gold rose over 1 UAE dirham per gram from the previous day’s price.
On Tuesday, 24k gold opened at 245.25 dirhams per gram. This was higher than Monday’s closing price of 244 dirhams per gram. Prices of other karats also increased, with 22k trading at 227 dirhams, 21k at 219.75 dirhams and 18k at 188.5 dirhams per gram.
The price increase in Dubai on Tuesday came as gold futures rose internationally. On the global spot market, gold was trading 15 dollars higher than the previous session, at around 2028 dollars per ounce in early morning trade in the UAE.
Rania Gule from XS.com said Monday’s price fall was due to positive US jobs data for January. Strong hiring and high wages indicated continued economic strength and high inflation there. This reinforced expectations that the US Federal Reserve will keep raising interest rates to cool prices.
Higher US interest rates put pressure on gold, as they increase the opportunity cost of holding the non-yielding bullion. Markets also felt the Fed will likely keep rates at their current high levels of 5.25-5.5% until mid-2022.
However, Gule noted expectations of US bond yields and the dollar index had improved significantly. When bond yields are high and the dollar strong, gold becomes less attractive as an alternative asset. This explains part of Tuesday’s recovery.
Overall, gold prices are facing pressure from expectations of ongoing US rate hikes. But analysts feel markets have now factored this in, so prices may consolidate around current levels barring major new developments.
For Dubai traders and investors, even small daily fluctuations have an impact as the gold market here closely follows moves overseas. The extended recovery on Tuesday suggests some of the previous session’s losses have been recouped locally.
In summary, Gold prices in Dubai rose over 1 dirham per gram on Tuesday morning, recovering from the previous day’s fall. The price increase came as international gold futures also climbed from their lows. Analysts attributed Monday’s dip to strong US jobs data bolstering rate hike views, while some easing expectations lent support the next day. Dubai prices generally follow global trends, with traders and buyers in the emirate impacted by even small daily price variations.
