Dubai gold prices edge higher as global rally loses momentum

Dubai: Dubai gold prices edged higher on Friday, despite a pullback in international bullion prices as investors booked profits after gold climbed to its highest level in more than two months.

The 24K gold price in Dubai rose to Dh524.25 per gram, from Dh523.50 on Thursday, while 22K gold increased to Dh485.50 from Dh484.75.

The move came as international gold prices eased after the recent rally began to lose momentum. Investors have been taking profits following the surge, while softer US inflation data has reduced expectations of another near-term Federal Reserve rate hike.

For shoppers in Dubai, that means gold remains close to recent highs even as the international market takes a breather. A small daily increase in local prices also means buyers are still paying elevated prices compared with earlier levels.

Rania Gule, Senior Market Analyst at XS.com – MENA, said gold's current decline should not be viewed as a full bearish reversal.

“I believe gold, currently trading around $4,317 per ounce, is going through an important phase that should not be interpreted as a full bearish reversal, but rather as a corrective move, profit-taking, and repositioning following the strong rally prices have experienced recently,” she said.

Gule said the pullback could ultimately be positive for the market by allowing short-term positions to be cleared and creating a more balanced base for gold to potentially resume its upward move.

Gold prices in India

Gold prices moved lower in India on Friday.

The 24K rate fell to ₹152,890 per 10 grams, from ₹153,600 on Thursday. The 22K rate declined to ₹140,150 per 10 grams, from ₹140,800.

The decline comes as higher gold prices begin to weigh on physical demand.

Reuters reported that physical gold discounts in India widened to their highest level in more than two months this week as the rally curbed consumption.

Why gold is pulling back

International gold was quoted at $4,356.77 per ounce, down $6.42, or 0.15 per cent.

Reuters reported that spot gold had fallen 0.1 per cent to $4,344.24 per ounce by 0851 GMT, after declining 1.3 per cent in the previous session. US gold futures for December delivery were down 0.4 per cent at $4,400.40.

Saxo Bank analyst Ole Hansen said profit-taking was setting in after the recent gains.

“Gold trades lower for a second day as profit-taking sets in following a strong run of gains, with tame U.S. inflation data and reduced expectations for further rate hikes largely priced in for now,” Hansen said.

“Following the breakout last week, gold is now caught in a $4,200 to $4,500 range with the latter being the 200-day moving average, a key signal for medium to longer term investors,” he added.

Gold had climbed to its highest level since June 5 on Thursday before reversing lower.

What next?

US producer prices were unchanged in July after a revised 0.1 per cent fall in June, while consumer prices barely increased last month, according to Reuters.

Markets are now pricing a 33 per cent chance of a rate hike in September, down from about 44 per cent last week, according to the CME FedWatch Tool.

Lower interest rates are generally supportive of gold because the metal does not pay interest. Gule said the broader outlook remains positive, although she expects the path higher to be uneven.

“From a fundamental perspective, I still believe the broader outlook for gold remains positive, although the path higher will not be a straight one,” she said.

She pointed to the potential for a weaker dollar, changing expectations around US monetary policy and continued central-bank demand as longer-term factors supporting gold.

Gule also highlighted a shift in central-bank reserve management, saying the World Gold Council's 2026 survey showed 74 per cent of participating central banks expect the dollar's share of global reserves to decline over the next five years, while 89 per cent expect central-bank gold holdings to continue rising over the next 12 months.

“Therefore, I believe that any relatively deep correction could attract buyers who view gold from a long-term perspective,” she said.

Oil prices also rose after Washington threatened an open-ended naval blockade on Iran, reviving concerns about supply.