Dubai gold prices ease after 24K touched Dh542, Fed outlook takes centre stage

Dubai: Dubai gold buyers saw prices ease on Monday morning, with 24-karat gold falling Dh3.50 per gram from Sunday’s level following another decline in international bullion prices.

The 24-karat variety stood at Dh530.25 per gram at 8.50 am on Monday, down from Dh533.75 on Sunday, while 22-karat gold fell Dh3.25 to Dh491 from Dh494.25.

Prices also moved lower across the other varieties, with 21-karat gold at Dh470.75, down from Dh474 on Sunday, and 18-karat gold at Dh403.50, down from Dh406.25.

Prices retreat from September high

Monday’s decline comes after a volatile opening week for gold buyers in Dubai, with prices still above where they started September despite retreating from the month’s high.

The 24-karat rate began the month at Dh522 before climbing to Dh542 on September 3, a Dh20 increase in two days. It has since fallen Dh11.75 from that high to Dh530.25, leaving it Dh8.25 above its September 1 level.

The 22-karat variety followed a similar path, rising from Dh483.25 on September 1 to Dh502 on September 3 before easing back to Dh491 on Monday. That leaves the rate Dh11 below its September high but Dh7.75 above the level recorded at the beginning of the month.

Prices had remained unchanged through the weekend, with 24-karat gold holding at Dh533.75 and 22-karat at Dh494.25 on both Saturday and Sunday before Monday morning’s decline.

Global gold slips below $4,400

International gold extended its decline, falling by as much as 0.9% and briefly slipping below $4,400 an ounce before recovering part of the loss.

Bullion had already fallen 1% in the previous session after US employment data showed nonfarm payrolls rose more than expected in August while the unemployment rate remained steady.

The stronger labour market data increased expectations that the US Federal Reserve could raise interest rates at its September 15 to 16 meeting, with traders pricing in roughly a 60% probability of an increase.

Higher interest rates can weigh on gold because the precious metal does not pay interest, while a stronger dollar can make bullion more expensive for buyers using other currencies. A gauge of the US currency rose on Friday following the jobs report.

Inflation and interest rates back in focus

Developments in the Middle East have also added to concerns over inflation after Iran said it targeted three oil tankers in the Strait of Hormuz and a number of US-linked ships in retaliation for American attacks on vessels over the weekend.

Oil prices climbed following the developments, with Brent crude trading near $97 a barrel.

Gold has traded within a relatively narrow range since recovering from levels near $4,000 an ounce in July, moving on either side of $4,400 last week while markets repeatedly reassessed the outlook for US interest rates.

Consumer price data due later this week will provide the next major indication of the Federal Reserve’s likely rate decision.

Gold remains well below the record high near $5,600 an ounce reached in January, although central-bank buying has re-emerged and some of the world’s largest money managers have rebuilt their gold holdings in recent weeks.

- With inputs from Bloomberg.