Dubai gold prices today: 24K slips as investors await US inflation data

Dubai: Dubai gold prices edged lower on Thursday, with the 24K rate at Dh531.25 per gram, down from Dh532 at Wednesday’s close, while 22K gold stood at Dh492, compared with Dh492.50 previously.

The move comes as global gold prices remain above $4,400 an ounce, with investors weighing a weaker US dollar against the possibility of higher US interest rates and awaiting fresh inflation data that could provide clues on the Federal Reserve’s next move.

For shoppers in the UAE, the small decline means gold remains close to record-high territory, but today’s move does not yet signal a major shift in the market.

Global spot gold was up 0.22 per cent at $4,424.74 an ounce early Thursday, according to goldprice.org.

Dollar effect

A softer US dollar is currently providing support to gold.

Reuters quoted Marex analyst Edward Meir as saying geopolitical developments in the Arabian Gulf were, “for now,” of secondary importance to gold, with the metal instead responding to the weaker dollar.

The dollar-priced metal becomes relatively cheaper for buyers holding other currencies when the US currency weakens, potentially supporting demand.

Gold is also being supported by concerns around US fiscal pressures. Daniel Hynes, senior commodities strategist at ANZ, said gold was benefiting as those pressures undermine confidence in the long-term value of US government debt and the dollar.

Fed watch

The bigger market question is what happens to US interest rates.

US producer-price data is due on Thursday, followed by consumer inflation figures on Friday. Investors are watching both closely because stronger inflation could influence expectations for the Federal Reserve’s interest-rate path.

Higher interest rates can weigh on gold because bullion does not generate interest income, making yield-bearing assets relatively more attractive.

The CME FedWatch Tool was showing a 60 per cent chance of a US rate increase this month, according to the supplied Reuters information.

However, analysts quoted by Bloomberg said much of that risk may already be reflected in gold prices.

Standard Chartered analysts, including Sudakshina Unnikrishnan, said the market had largely priced in the risk of a rate increase and expected the Fed to remain on hold this year, with gold potentially recovering as investors focus on de-dollarisation, currency debasement and bond-market risks.

Gulf tensions

The wider geopolitical backdrop remains significant, although analysts cited by Reuters say it is not currently the primary driver of gold.

Iran said on Wednesday it had attacked 10 ships near the Strait of Hormuz after the US sank five Iranian oil tankers. The attacks represent the biggest wave of attacks on shipping by both sides since the six-month-old war began.

At the same time, Brent crude settled above $100 a barrel for the first time since late May, adding to concerns about the inflationary impact of higher energy prices.

For gold investors, however, the immediate focus is increasingly on the dollar and US monetary policy.