Gold steadies at $3,900 after worst October since 2008

Dubai: Gold prices in the UAE edged higher on Monday. 24-karat gold trades at Dh470.25 per gram, up from Dh467 at the last close. 22-karat sells at Dh435.50, 18-karat at Dh358 and 14-karat at Dh279.25 on Monday morning.

The local gain follows a rebound in global prices. Spot gold rose 0.72 per cent to $3,913 an ounce by 10:15 am in Dubai, after seeing a much bigger rise in its previous session. Bargain hunters stepped in after Friday’s 3.7 per cent slump took the metal to its lowest level in a year. October was its worst month since 2008.

Markets in wait and watch mode

Cheaper oil has given the metal some relief from inflation worries. Crude fell after Axios reported that US President Donald Trump wants to give diplomacy more time before deciding whether to resume strikes on Iran. A decision is expected after Tuesday’s midterm elections. However, Trump has threatened fresh strikes, and Tehran has warned of wider retaliation. Several Gulf states fear another attack could trigger a far more destructive regional war.

A global tech selloff has added pressure. Investors have been selling bullion, as we saw on Friday, in order to cover  their losses from the retreat in artificial intelligence stocks. Equity losses eased in Asian trading on Monday, and US futures also turned higher.

Bearish near-term outlook

Gold breaking below $4,000 has put confidence to the test says Ahmad Assiri Research Strategist at Pepperstone. “This initial stability suggests selling pressure has eased to some extent, but it is insufficient to put an end to the correction,” he added. 

He maintains a bearish outlook on gold for the tenth consecutive week. “Easing geopolitical concerns may help reduce pressure on gold, although yields and the dollar remain important-to-watch factors. Reclaiming $4,000 could help rebuild confidence a bit, while trading below it leaves the metal sensitive to data that reinforce expectations of tighter monetary policy.”

Spot gold has climbed 0.54 per cent to $3,905.51 an ounce as of 11:00 am in Dubai. Silver gained 2.05 percent to $50.31 an ounce, having dropped nearly 6 per cent on Friday. Platinum and palladium were little changed after big declines in the previous session. The Bloomberg Dollar Spot Index, a gauge of the US currency, was 0.1 per cent higher.