Gold prices in Dubai experienced a significant increase on Thursday morning, bouncing back from Wednesday’s decline as global bullion prices rose following the signing of an interim peace agreement between the US and Iran. The 24-karat variety was priced at Dh519.75 per gram at 9.22am, an increase from Dh508.25 on Wednesday, reflecting a rise of Dh11.50 within a single day. The 22-karat variety increased to Dh481.50 per gram from Dh470.75, showing a rise of Dh10.75 during the same timeframe. The recent rebound has brought Dubai gold prices back near the levels observed earlier this week, yet they still fall short of the month’s highs that were noted at the beginning of June.

Gold has experienced significant fluctuations in Dubai this month, influenced by geopolitical risks, oil prices, and expectations surrounding US interest rates, keeping buyers and investors cautious. The 24-karat rate started June at Dh539.75 per gram and increased to Dh542.50 on June 2, marking the highest level noted this month. It decreased to Dh536 on June 3 and Dh538.50 on June 4, before falling to Dh522.50 on June 5. Prices remained steady at Dh521.75 on June 6 and June 7, then decreased to Dh521.50 on June 8 and further declined to Dh514.25 on June 9. The most significant decline occurred on June 10, when 24-karat gold fell to Dh492.50, marking the lowest point reached this month. The rate then recovered to Dh506.50 on June 11 and remained stable around Dh508.50 from June 12 to June 14. It rose above Dh520 on June 15 and June 16, then dropped to Dh508.25 on June 17 before bouncing back again on Thursday.

The 22-karat variety exhibited a comparable trend, beginning the month at Dh500 per gram and increasing to Dh502.25 on June 2. It dropped to Dh456 on June 10, marking the lowest level of the month, before bouncing back to Dh481.50 on Thursday. Internationally, bullion increased by as much as 1.7% to $4,328 an ounce, recovering from the decline seen in the previous session. Gold received support from the signing of the interim peace deal between the US and Iran, despite indications from the Federal Reserve that a rate hike may still be on the horizon later this year. US and Iranian officials finalised the peace agreement electronically on Wednesday evening. However, there is still uncertainty regarding the reopening of the Strait of Hormuz and the timeline for shipping in this crucial energy route to normalise.

Oil prices declined following the agreement, as markets anticipated that the pact would alleviate the global energy crisis that had driven up inflation and bolstered expectations for interest rate increases. Traders continue to exercise caution as it may take a while for fuel prices to stabilise and for transit through the strait to revert to levels seen before the conflict. The Federal Reserve maintained interest rates on Wednesday and emphasised its commitment to price stability, while omitting a mention of further rate adjustments in its statement. Market participants are currently anticipating a shift towards a more restrictive monetary policy by October. Increased interest rates typically exert downward pressure on gold, as the metal lacks interest payments, rendering it less appealing when the returns on cash and bonds increase.