Gold prices in Dubai fell by more than 9 dirhams amid expectations of an Fed rate hike

Gold prices continued to rise on Tuesday morning amid falling oil prices and a weakening dollar, which contributes to slowing inflation and reduces concerns about rate hikes.

According to data from Dubai Jewellery Group, 24-karat gold traded at Dh523.25 per gram at the market opening on Tuesday. Other varieties, including 22K, 21K, 18K, and 14K, were priced at Dh484.75, Dh464.75, Dh398.25, and Dh310.75 per gram, respectively.

Globally, spot gold traded at $4,346.5 per ounce, showing a 0.01 percent increase according to UAE time at 9:12 AM. Silver also rose by 0.29 percent, reaching $66.09 per ounce.

Financial analyst and Investment Director at Century Financial, Vijay Valecha, noted that pressure on gold eased after Treasury bond yields fell following a recent surge. He explained that bullion typically comes under pressure when yields rise.

Valecha stated that the drop in oil prices for the third consecutive day is linked to easing supply disruptions in the Middle East, which strengthens the anti-inflationary factor for gold. He added that gold-backed exchange-traded funds have seen an inflow of funds for eight consecutive days despite recent price weakness, indicating strong investor confidence.

He suggested that if yield increases are driven more by fiscal issues than by rate expectations, a weaker dollar could support a generally favorable environment for precious metals. Structural factors, such as growing budget deficits, increasing debt burdens, and a likely dollar weakening cycle, continue to support a medium-term bullish scenario, with pullbacks viewed as buying opportunities.

From a technical perspective, the analyst reported that gold has recovered its short-term trend line and is testing resistance in the $4,431–$4,434 range. A breakout above this zone would pave the way for $4,510 and subsequently $4,573. He explained that support lies at levels of $4,385 and $4,340, and bouncing off this zone maintains a constructive short-term structure. It is preferable to adhere to a buying strategy on dips towards support while the price remains above $4,340, and a break above $4,434 would confirm a return to a broader uptrend.

Silver, in turn, follows gold's recovery and is heading toward weekly gains, supported by the same anti-inflationary and dollar-related factors.

Gold prices slightly decreased in Dubai and the UAE on Friday morning. According to data from Dubai Jewellery Group, 24K and 22K precious metal options traded at 522 and 438.5 dirhams per gram, respectively, when the market opened on Friday morning.

The price of 24K gold fell by almost 38 dirhams per gram since August 25th. Among other varieties, 21K, 18K, and 14K dropped to 463.5, 397.25, and 310 dirhams per gram, respectively.

The spot gold rate was $4331 per ounce, which is 0.8 percent lower. Silver decreased by 1.1 percent to $63.6 per ounce.

Simon-Peter Massabni, Head of Business Development at xs.com, noted that gold is undergoing a sharp correction during Thursday's trading. This pressure is caused by the strengthening of the US dollar, rising Treasury yields, and growing expectations that the Federal Reserve will maintain restrictive monetary policy.

He explained that one of the key factors in the decline was the recovery of US Treasury yields. The yield on 10-year bonds returned to 4.90 percent. In contrast, long-term rates remained under pressure after the US government's plan to buy up to $6 billion in long-term debt was lower than some market participants expected. Higher rates increase the opportunity cost of holding gold, which does not generate interest.

Furthermore, the dollar regained ground against major world currencies after recent trading at a two-week low. The combination of higher rates and expectations of sustained high interest rates has once again increased the relative attractiveness of dollar-denominated assets. For gold, a stronger dollar is usually a negative factor because it makes the metal more expensive for investors using other currencies.

Adding to these factors was a sharp rise in oil prices. Brent crude oil once again exceeded the $100 per barrel threshold and traded above $105 during the session, while WTI also rose above $100.

Geopolitical tensions and energy supply risks in the Middle East continue to support high prices, while simultaneously fueling concerns about a new wave of energy-related inflation. Massabni added that the oil rally creates a complex environment for gold. Although geopolitical tension usually supports demand for safe-haven assets, keeping oil prices above $100 may force major central banks to keep interest rates higher for longer. In the short term, this effect outweighs the safe-haven demand, creating additional pressure on precious metals.