On Tuesday morning, gold prices in Dubai experienced a decline, providing jewellery buyers with a more advantageous entry point following a month characterised by significant volatility, with local rates fluctuating by over Dh40 per gram. The 24-karat variety was priced at Dh496.25 per gram at 10.35 am, a decrease from Dh506 on Monday, while the more popular 22-karat stood at Dh459.50, down from Dh468.50 a day earlier. The recent decline has pushed 24-karat gold beneath the Dh500 threshold for the first time since June 10, when it was valued at Dh492.50. Rates commenced the month at Dh539.75 on June 1, subsequently increasing to Dh542.50 on June 2. This was followed by a decline to Dh538.50 on June 4 and further to Dh522.50 on June 5. Prices remained elevated above Dh520 for a significant portion of the initial week, subsequently declining to Dh514.25 on June 9 and further to Dh492.50 on June 10, representing one of the most pronounced retracements of the month. Gold rebounded to Dh508.50 from June 12 to June 14, climbed to Dh521.25 on June 15, and reached Dh522.25 on June 16, before retreating to Dh508.25 on June 17 and Dh509.25 on June 18. The metal declined to Dh500 on June 19, maintained a position close to Dh500.75 over the weekend, increased to Dh506 on Monday, and subsequently decreased again on Tuesday.

As of Tuesday, the price of 24-karat gold stands at Dh46.25 per gram below its level recorded on June 2, whereas 22-karat gold has decreased by Dh42.75 from the June 2 price of Dh502.25. Gold experienced a decline as inflation concerns eclipsed initial optimism regarding negotiations aimed at resolving the conflict in Iran. Bullion declined by as much as 1.8%, approaching $4,115 an ounce, thereby negating a slight increase observed in the prior session. Rising consumer prices, influenced in part by nearly four months of conflict in the Middle East, have increased the likelihood that central banks may maintain elevated borrowing costs for an extended period or consider additional tightening measures. That is unfavourable for gold since the metal does not generate interest, rendering it less appealing when yields on cash and bonds are high. The hawkish stance taken by new Fed Chair Kevin Warsh has created unease among investors, counteracting the favourable effects of the interim US-Iran peace agreement established last week.

The dollar has appreciated over 1% since the central bank’s previous meeting, exerting additional pressure on bullion, which is denominated in the US currency. Gold has declined by over 20% since the onset of the conflict at the end of February, whereas silver has experienced a decrease of approximately 33%. Traders are poised to monitor the US personal consumption expenditures price index set for release on Thursday, as market expectations indicate a potential acceleration in this gauge. Linh Tran stated that gold continues to exhibit caution and is leaning towards a downward trajectory in the short term, as the market has yet to generate sufficient momentum for a definitive recovery. “The primary influence continues to stem from anticipations regarding Federal Reserve policy, with interest rates expected to remain high for an extended period compared to earlier forecasts,” Tran stated. This maintains a high opportunity cost for holding gold, thereby constraining the attractiveness of the precious metal.

Tran stated that the dollar maintains a position of relative stability, with the DXY fluctuating between 100.6 and 100.8, while the 10-year US Treasury yield remains high at approximately 4.5%. “The combination of a resilient dollar and high real yields continues to create a significant headwind for gold, especially as short-term capital flows tend to favour yield-bearing assets over non-yielding ones,” Tran stated. Easing geopolitical risks have also diminished some of the demand for safe-haven assets. Gold had previously benefited from defensive positioning; however, as tensions have momentarily eased, the demand for safe-haven assets has not been robust enough to maintain upward momentum. Tran indicated that gold ETFs experienced outflows in May, implying that the demand for financial investment has not yet shown signs of a sustained recovery.