Dubai gold prices rise slightly as oil prices cool

If you are looking to buy gold in the UAE, then note that prices have come down slightly compared to earlier highs. In the last 30 days alone gold prices have seen a drop of 6.30 per cent. In fact, 18-karat gold is currently trading below the Dh400/gram mark this Tuesday morning at Dh398.25.

In the UAE, 24-karat gold is trading slightly lower at Dh523.25 versus the previous night’s close at Dh523.75. On the other hand, 22-karat gold has also seen a 0.25 fils drop. Bullion was trading around $4,340 an ounce, reversing course after falling the most in a week the day before.

There is a straight co-relation between the way gold prices are reacting in tandem to the falling oil prices. The decline in oil prices has reduced inflationary concerns, a tailwind for gold that typically benefits when rates are lower.

Oil prices however, have held steady on Tuesday, following a decline of over 9% across the prior four sessions. Worries about Middle East export disruptions have eased and fresh diplomatic efforts have emerged aiming to end the US-Iran conflict.

Speaking on how gold prices have been decoupling, Ole Hansen, Head of Commodity Strategy, Saxo Bank, said that the ETF demand itself was showing the disconnect.

“Real yields are rising, with the 10-year tenor reaching its highest level in 20 years amid sticky inflation and a renewed surge in long-end government bond yields. Yet instead of triggering another wave of ETF liquidation, investor demand for gold is showing resilience. This time, therefore, it is not just the gold price that has decoupled from real yields - ETF holdings are showing signs of doing so as well.”

Sustained optimism about the metal's long-term prospects has also encouraged some investors to buy on price dips in recent weeks. Bullion-backed exchange-traded funds have seen roughly 50 tons of inflows so far this month, marking a third consecutive month of gains.