Dubai gold prices climb again after heavy losses

Dubai: Dubai gold prices rebounded sharply on Wednesday morning, recovering part of the losses seen earlier in the week after a steep correction rattled retail buyers and traders across the market.

By 7.50 am, 24-carat gold in Dubai was priced at Dh608.75 per gram, up from Dh594.25 on Tuesday. The 22-carat variety rose to Dh563.75 from Dh550.25, signalling a clear return of buying interest following days of intense volatility. (Check latest UAE gold prices here, alongside prices in Saudi Arabia, Oman, Qatar, Bahrain, Kuwait, and India.)

The rebound comes after prices slipped to some of the lowest levels seen this month. At the start of February, 24-carat gold had dropped to Dh564.25 on February 2, after closing January near Dh589.50. The pullback followed an aggressive rally in late January, when prices surged to Dh639.25 on January 28 and Dh629.25 a day later, levels that triggered widespread profit-taking.

Earlier in January, prices had been far more stable, beginning the month near Dh536.50 for 24-carat gold and gradually rising through the Dh550 to Dh570 range. Momentum accelerated mid-month, pushing prices past Dh600 before the rally peaked sharply toward the end of January. That surge proved unsustainable, leading to a rapid unwind that spilled into early February before buyers returned.

Global markets reflect a similar pattern. Gold rose for a second consecutive session, rebounding above $5,000 an ounce after suffering one of its steepest declines in more than a decade. Bullion gained as much as 2.1% in early trading, building on a rise of over 6% in the previous session, helped by a softer US dollar and a return of risk appetite across markets.

Despite the recent fall, gold remains nearly 15% higher for the year, even after retreating about 12% from the record high reached on January 29. Silver also advanced, following its own sharp correction.

The recent sell-off followed a powerful January rally driven by speculative positioning, geopolitical uncertainty and concerns around US monetary policy credibility. The move reversed abruptly late last week, when silver posted its largest daily decline on record and gold suffered its steepest drop since 2013.

Chinese funds and Western retail investors had built sizeable positions in precious metals, amplified by leveraged exchange-traded products and heavy call-option activity. The unwinding began during Asian trading hours and extended into the early part of this week.

Volatility is expected to persist. According to Bank of America Corp., price swings are likely to remain elevated, though gold retains a stronger long-term case than silver.

Several banks continue to back a recovery. Deutsche Bank AG said it remains confident in its outlook for bullion, maintaining a forecast for gold to rally toward $6,000 an ounce, reinforcing expectations that the latest correction may prove temporary.

- With inputs from Bloomberg.