Gold prices in Dubai commenced the week on a modest decline, maintaining stability over the weekend. The 24-karat variety is currently valued at Dh501 per gram as of 9:35 am, a decrease from Dh503 observed on Sunday. The 22-karat variety also eased to Dh464 per gram, down from Dh466 on Sunday, as global gold retraced some of last week’s gains during early Monday trade. The latest move still positions Dubai gold significantly above the levels observed in late June, with 24-karat gold recorded at Dh485.25 on June 30 and Dh485.75 on June 29. Prices increased during the initial week of July, ascending from Dh489.75 on July 1 to Dh494.75 on July 2, subsequently surpassing Dh501 on July 3 and stabilising at Dh503 over the weekend.

Gold steadied near $4,160 an ounce after posting its first weekly advance since May, supported by reduced expectations that the US Federal Reserve will raise interest rates. Ahmad Assiri noted that gold experienced a rally last week following the market’s interpretation of comments from Fed Chair Warsh as being less hawkish than previously anticipated. That pushed US Treasury yields lower, weakened the US dollar slightly, and lifted gold toward $4,200 as investors reduced expectations for monetary tightening. Gold tends to benefit when expectations for rate hikes diminish, as lower yields decrease the opportunity cost associated with holding the metal. Assiri noted that gold relinquished a portion of its gains during the early session on Monday, yet the overall sentiment remained cautiously optimistic following several weeks of selling pressure.

“In my view, gold is likely to remain under pressure, with elevated yields continuing to cap demand. That said, the outlook looks considerably brighter than earlier in the past few weeks, when the market was eyeing a move towards the 3900 range,” he said. “At the core of this, markets still cannot pin down Warsh’s policy outlook, as he continues to avoid providing forward guidance hence introducing high volatility into the yield curve and in trun the metal.” In June, gold prices in Dubai experienced notable volatility, with 24-karat gold peaking at Dh522.25 on June 16, subsequently declining to Dh486 by June 25 and further to Dh485.25 by the end of the month on June 30.

The beginning of July has shown resilience, with 24-karat gold surpassing Dh500 as of July 3. The 22-karat variety exhibited a similar trend, increasing from Dh453.50 on July 1 to Dh466 over the weekend, before retracting to Dh464 on Monday. Soft US jobs data and lower energy prices contributed to traders scaling back their expectations for additional monetary tightening. Oil prices declined on Monday as an increased number of tankers navigated the Strait of Hormuz, coupled with OPEC+’s indication of higher supplies. This development alleviated some inflationary pressures that had influenced expectations regarding borrowing costs.