Gold prices in Dubai experienced an uptick on Friday morning, as 24-karat gold surpassed the Dh500 mark following two consecutive days of increases in the international market. At 9:52 am, the 24-karat variety was priced at Dh503.50 per gram, an increase from Dh494.75 on Thursday. The 22-karat variety increased to Dh466.25 per gram, rising from Dh458 the previous day. The latest move positions Dubai gold prices close to the levels observed in the third week of June, although they continue to be significantly lower than the peak reached in early June. The 24-karat rate peaked at Dh538.50 on June 4 before experiencing a decline throughout the month, while the 22-karat variety also hit Dh498.50 on that same day. Prices remained high in the initial half of June, as 24-karat gold consistently traded above Dh520 for multiple sessions from June 5 to June 16.

The market subsequently experienced a cooling period, dipping below Dh500 on June 23 and declining to Dh485.25 by June 30, before staging a recovery in the initial three days of July. Gold prices are experiencing an upward trend due to a combination of factors. Increased uncertainty in global markets, inflation concerns, and shifts in monetary policy are driving investors towards gold as a safe-haven asset. Additionally, geopolitical tensions and fluctuations in currency values contribute to the demand for gold, further propelling its price higher. Gold extended its gains for a second consecutive day following disappointing US jobs data, which diminished the likelihood of the Federal Reserve implementing interest rate hikes this year to combat inflation. Bullion experienced an increase of up to 1.8%, reaching approximately $4,195 per ounce, following a gain of 2.3% in the preceding session, marking its most significant rise in three weeks.

The latest US labour market data indicated a deceleration in hiring during June, reinforcing indications that the economy is encountering challenges despite recent areas of strength. Softer jobs numbers are expected to alleviate the pressure on the Fed regarding a potential rate hike at its July meeting. Higher borrowing costs typically exert downward pressure on gold, as the metal does not yield interest. Investors have reduced their expectations for an additional rate increase in the United States. Swap markets currently reflect an 18% probability of a shift at the upcoming Fed meeting, a decrease from approximately one-third earlier this week. Oil prices, a significant factor influencing inflation in recent months, have also declined towards pre-war levels as tanker flows through the Strait of Hormuz show improvement. Prices have moderated this week following constructive dialogues in Qatar between the US and Iran regarding the transition of their interim 60-day truce into a sustainable peace agreement.

Lower oil prices may alleviate inflationary pressures, thereby providing the Federal Reserve with greater latitude to maintain current interest rates. Recent apprehensions regarding the autonomy of the US Federal Reserve have further bolstered demand for gold. A push by President Donald Trump to reshape the Fed has revitalised the debasement trade that contributed to gold reaching a record high in January. Trump and his allies are exploring options to replace members of the Fed’s Board of Governors in order to install their preferred candidates, as reported by sources knowledgeable about the situation. Trump stated on Thursday his intention to continue pursuing the removal of Fed Governor Lisa Cook, following a Supreme Court ruling that permits her to retain her position while contesting the administration’s efforts to remove her.