Dubai gold prices rise after Fed rate hike, but pare gains soon

Dubai: Gold prices in the UAE have risen on September 17, in cue with global bullion prices which rose as much as 1.3 per cent to nearly $4,320 an ounce, before paring gains. 24-karat gold is trading at  Dh515.75  versus the previous day's close at Dh512, whereas 22-karat trades at Dh477.50 per gram on Thursday.

Bullion prices cooled off post the initial rise to settle below $4300/oz, trading at $4295/oz at the time of publishing. The U-turn came as the Fed delivered a more hawkish signal than expected and fears of future rate hikes.

Pullback in treasury yields

Treasury yields eased after jumping to their highest level since 2024 following the Fed's unanimous move Wednesday to raise rates by a quarter point. The pullback in yields took some pressure off gold, which tends to struggle when yields are high since it pays no interest. 

According to Linh Tran, Market Analyst at XS.com, “Gold’s near-term outlook is likely to involve consolidation with a slight downside bias. A sustained recovery would become more credible only if Treasury yields and the U.S. dollar begin to cool, or if economic data cause the market to reduce expectations for another rate increase.”

The Fed's median projection for rates by the end of 2026 rose to 4.1 per cent, up from an earlier 3.8 per cent, signaling officials expect further hikes. In his post-decision briefing, Fed Chair Kevin Warsh noted that there is an ongoing threat from inflation and that too many categories of goods and services still showed price gains above 3% over both six- and twelve-month periods.

Spot gold is down 1.14 per cent on Thursday while Silver is also losing its shine and trading at $63.73 down 1.3 per cent.  The Bloomberg Dollar Spot Index, a gauge of the US currency, was 0.1% higher after rising 0.5% on Wednesday.