Gold prices in Dubai lost Dh7.5 since the market opened on Monday, with the 24K trading at Dh493 per gram. It fell from Dh497.25 a day before, losing Dh4.25 in one day.
The other variants, 22K, 21K, 18K, and 14K, were trading at Dh456.5, Dh437.75, Dh375.25, and Dh292.75 per gram, respectively.
Globally, the spot gold price fell 1.02 per cent to $4,091.1 per ounce. Silver was down 2.15 per cent, trading at $56.35 per ounce.
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Vijay Valecha, financial analyst and chief investment officer at Century Financial, said uncertainty over the Iran war and its implications for inflation and interest rates continued to weigh on gold prices.
Gold has fallen by around a fifth since the US-Iran conflict broke out in late February, as rising oil prices fuelled concerns about inflation, he explained. Higher inflation could make interest rates stay elevated for longer, increasing the pressure on gold, which does not pay interest.
Valecha said conflicting signals about progress towards ending the Iran war had added to uncertainty over the inflation outlook and the US Federal Reserve’s interest rate path. Oil prices have retreated from recent highs, but uncertainty over the conflict continues to influence market expectations.
However, investor demand and central bank purchases could help support gold prices, Valecha said. Holdings in gold-backed exchange-traded funds (ETFs) have climbed to a four-year high, despite a correction in gold prices from their late-August peak.
Central bank buying could also provide a floor for prices, as it signals continued demand for the metal even as higher oil prices and bond yields put pressure on bullion. Valecha said the current divergence between ETF holdings and gold prices suggested that investors had continued adding to their positions despite the market correction.
From a technical perspective, gold has traded between $4,070 and $4,220 per ounce this month. Valecha said a break above or below this range would help establish the metal’s next medium-term direction.
He identified $4,080 as a potential near-term support level, based on a trendline connecting several previous lows. If prices remain within the current range, gold could continue to face pressure as investors assess developments in the Iran war, oil prices and the outlook for interest rates.
Source: Khaleej Times