Dubai gold prices dip, but 24K still holds above Dh520
24K gold slipped to Dh521.25 as markets tracked Fed signals and US-Iran talks
At 9.30 am, 24-karat gold stood at Dh521.25 per gram, down from Dh522.25 on Tuesday, while 22-karat gold eased to Dh482.50 from Dh483.50. The 21-karat variety was priced at Dh462.75, compared with Dh463.75 a day earlier, while 18-karat gold slipped to Dh396.75 from Dh397.50.
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The latest move marks a small pullback after prices recovered from the sharp weakness seen on June 10, when 24-karat gold fell to Dh492.50 and 22-karat stood at Dh456. Since then, Dubai rates have climbed back strongly, with 24-karat gold returning above the Dh520 mark this week, although prices remain below the June 2 level of Dh542.50.
Why gold is moving differently this time
Gold’s recent performance has been shaped by an unusual market reaction to Middle East tensions. Instead of drawing the usual safe-haven demand, the conflict had been treated by investors as an inflation risk because of the threat to energy flows through the Strait of Hormuz.
Higher oil prices fed into inflation expectations, which in turn strengthened the case for tighter US monetary policy. That weighed on gold because bullion does not pay interest and tends to lose some appeal when yields stay elevated.
Ahmad Assiri, Research Strategist at Pepperstone, said gold had been caught in a difficult market set-up, where geopolitical stress was being priced through inflation and interest rate expectations, instead of traditional haven demand.
Peace hopes shift market focus
That pressure is now beginning to ease as investors assess the possibility of a US-Iran interim peace framework. Gold held near $4,325 an ounce globally after gaining more than 6% over four sessions, with markets watching whether any agreement can lead to a genuine reopening of shipping flows through the Strait of Hormuz.
US President Donald Trump has said the waterway can fully reopen by Friday, although some European allies remain cautious over the risk of renewed disruption. A stable reopening would help ease energy supply concerns and reduce the inflation pressure that has kept central banks cautious.
The potential return of Iranian oil sales and eventual access to frozen assets are also being closely watched by traders, since any improvement in energy supply could cool inflation expectations and reduce the pressure for higher interest rates.
Fed decision now in focus
Investor attention is also turning to the Federal Reserve’s policy decision later on Wednesday, the first under new chairman Kevin Warsh. Markets expect rates to be kept on hold, but traders will be looking for clues on whether the Fed is still open to further tightening if inflation remains elevated.
US CPI has risen to 4.2%, the highest since May 2023, driven mainly by energy costs. Recent strong jobs data had also raised questions over whether the Fed could maintain a restrictive stance for longer.
- With inputs from Bloomberg.
