Dubai gold rates drop by nearly Dh15, 24K back below Dh500 ahead of weekend

Dubai: Dubai gold rates dropped by nearly Dh15 by Friday evening, with 24-karat now back below Dh500 for now, after previously showing signs it would stay up ahead of the weekend.

Dubai’s gold market continued to push higher earlier in the day, with retail bands posting some of their strongest levels this month. The rate for the purest 24-karat gold currently retailed at Dh492, after spiking as much as Dh506 per gram earlier - well above last week’s Dh481 average.

The 22-karat variant dropped to Dh455.50, after falling as much as Dh468.75 during the day. It had rebounded from a brief dip to Dh465.25 on Thursday. (Check latest UAE gold prices here, alongside prices in Saudi Arabia, Oman, Qatar, Bahrain, Kuwait, and India.)

Local prices have trended steadily upward this month. Retail rates for 24K hovered between Dh480 and Dh483 through the first week of November before accelerating toward the Dh495 to Dh506 range over the past five sessions. The 22K band followed the same pattern, rising from around Dh444 in early November to nearly Dh469 by mid-month.

The sharpest gains have come in the past four days, reinforcing the strength of the current rally.

Swings turn severe

The plunge mirrors severe price swings in international bullion markets. Gold dropped as much as 2.79% to $4,073 an ounce on Friday. It shot to records throughout the year as investors looked for something that could protect from potentially high inflation and big debt loads built by the U.S. and other governments worldwide. But interest rates staying higher can hurt gold, which pays its investors nothing in interest or dividends.

Global gold rates were earlier on track for its best week in a month, with a gain of around 5%. The metal has clawed back most of the losses from the previous session and continues to benefit from a return to safe-haven positioning.

Investors remain uneasy about the backlog of economic data that will be released once Washington resumes normal operations after a six-week government shutdown. Market watchers are divided on whether this wave of numbers will reveal enough weakness to justify a US rate cut.

Gold has gained close to 60% since the start of the year and is set for its strongest annual performance since 1979. Central banks have been significant buyers, building reserves to diversify assets and protect against fiscal stress. Investor flows have accelerated for the same reasons, with sentiment leaning toward caution rather than risk-taking.

Debate over Fed policy

Some of the week’s optimism around a potential US rate cut faded after Federal Reserve officials signalled little urgency to ease borrowing costs. Even so, bullion continues to draw support from the prospect of fresh liquidity injections.

The Federal Reserve Bank of New York’s Roberto Perli said the central bank “won’t have to wait long” before purchasing assets to maintain the desired level of liquidity in the financial system.

Last month, policymakers confirmed they would stop shrinking the balance sheet from December 1 after volatility emerged across short-term funding markets, a move that traders view as supportive for gold.