Gold prices steady in Dubai after sharp selloff as investors await Fed rate cut

Dubai: After three volatile sessions, gold prices steadied on Wednesday, with Dubai’s 24-karat rate opening at Dh476 per gram after recovering from a sharp drop to Dh470.50 the previous afternoon. By Tuesday evening, prices had clawed back to Dh474.75, reflecting renewed buying interest.

The popular 22-karat variant traded at Dh440.75 per gram in the morning before ending Tuesday slightly lower at Dh439.50. Jewellers said demand picked up as retail investors viewed the dip as an opportunity to enter before an expected US interest rate cut.

Globally, bullion held near $3,950 an ounce after losing more than 4% over the past three sessions. Traders are positioning for a 25-basis-point cut from the Federal Reserve later this week. While Chair Jerome Powell is unlikely to offer much forward guidance, lower borrowing costs generally support non-yielding assets such as gold.

(Check latest UAE gold prices here, alongside prices in Saudi Arabia, Oman, Qatar, Bahrain, Kuwait, and India.)

The metal’s recent retreat followed a torrid rally that lifted it to a record above $4,380 an ounce last week. Technical indicators had shown that ascent had run too far, too fast, a move coinciding with reduced haven demand amid signs of progress in US-China trade relations.

With Donald Trump and Chinese counterpart Xi Jinping due to meet on Thursday, the US president told reporters he expects that there will be “a very good outcome for our country and for the world.” The prospect of easing geopolitical tension added to the profit-taking pressure earlier in the week.

Even after the correction, gold remains up nearly 50% this year, underpinned by strong central-bank purchases and what analysts call the “debasement trade” — investors seeking refuge from growing fiscal imbalances by moving out of sovereign bonds and currencies.

The rally has also drawn heavy institutional participation through gold-backed exchange-traded funds. However, outflows this week signalled a cooling in sentiment. Investors pulled $1 billion from State Street’s SPDR Gold Shares on Monday, the largest withdrawal since April, according to Bloomberg data. Total ETF holdings have since fallen at the fastest pace in six months, a sign that some short-term speculative positions are being unwound as the market awaits the Fed’s decision.