Dubai gold hits two-month high after 24K jumps Dh45.75 in eight days

Dubai: Dubai gold buyers are facing the highest rates in more than two months after prices extended a rapid August rebound, with 24-karat gold reaching Dh531.25 per gram on Tuesday.

The 24K rate rose Dh3 from Dh528.25 on Monday, while 22K gold increased by the same amount to Dh492 from Dh489.

Tuesday’s move takes 24K gold to its highest level since June 4, when it stood at Dh538.50, according to the 90-day price data. The latest rate is also Dh45.75 higher than the Dh485.50 recorded on August 3.

The 22K variety has followed a similar path, climbing Dh42.50 from Dh449.50 on August 3 to Dh492 on Tuesday.

August rebound gathers pace

The latest increase extends a strong turnaround in Dubai gold rates after 24K spent much of July below Dh500.

Prices fell to Dh481.50 on July 17 before recovering to Dh500.75 on July 22, then slipping back to Dh485.25 by July 31.

The pace of the rebound picked up in August, with 24K moving from Dh492.25 on August 4 to Dh514 on August 5 and Dh523.75 by August 7. It reached Dh528.25 on Monday before rising to Dh531.25 on Tuesday.

Despite the recent gains, the current 24K rate remains below the 90-day high of Dh563.75 recorded on May 14.

Global gold moves above $4,400

The rise in Dubai prices follows renewed strength in international bullion, which climbed above $4,400 an ounce to a two-month high on Tuesday.

Gold gained as much as 1% during the session after advancing 3.6% over the previous two trading days. Buying gained momentum after bullion moved above its 100-day moving average on Monday, while recent demand has also been supported by dip-buying and increased inflows into gold-backed exchange-traded funds in China.

Ahmad Assiri, Research Strategist at Pepperstone, said the latest move was being driven mainly by renewed investor flows and a change in market sentiment after a period of relatively tight trading ranges.

“Gold prices moved higher in early session trading beyond $4,400 an ounce range, with the latest move appearing to be driven primarily by renewed flows into the metal and a notable shift in the metal market sentiment,” Assiri said.

He added that investors appeared to be rebuilding their exposure to gold, helping prices recover relatively quickly, while geopolitical developments remained part of the wider market backdrop.

Flows take the lead

Assiri said tensions around the Strait of Hormuz and uncertainty over the broader US-Iran situation continued to influence markets, although recent gold price movements suggested investor flows were having a stronger impact.

“However, the magnitude of the latest gold move suggests that flows are currently having the greater influence on prices,” he said.

“If this change in sentiment continues to attract further flows, it could remain an important factor in determining whether gold can consolidate around $4,400 and potentially extend the recovery towards higher levels.”

Central bank purchases have also provided support to bullion in recent weeks, helping gold hold above the $4,000-an-ounce level after earlier weakness.

US inflation data in focus

Attention is now turning to US consumer price inflation figures due on Wednesday, which could influence expectations for the Federal Reserve’s next move on interest rates.

The inflation reading follows weaker US employment data released last week and comes while Federal Reserve policymakers continue to assess whether borrowing costs need to rise further to bring inflation back towards the central bank’s 2% target.

Higher interest rates can weigh on gold because the metal does not pay interest, while expectations of lower borrowing costs can make bullion comparatively more attractive to investors.

Geopolitical developments are also being watched after US President Donald Trump hardened his position on Iran on Monday, reducing expectations of an agreement that could reopen the Strait of Hormuz and bring the months-long conflict to an end.

Assiri said Brent crude was also moving towards the upper $80s per barrel, although oil remained more directly exposed to developments surrounding the Strait of Hormuz.

“As of now, the two markets are reacting to the same broader environment that gold is being driven primarily by strong flows and a notable improvement in sentiment, while oil remains more closely tied to headline risk,” he said.

- With inputs from Bloomberg.