Gold prices in Dubai experienced a decline for the second consecutive day on Tuesday morning, providing jewellery buyers with a modest opportunity for relief following a brief surge past Dh500 over the weekend. At 9.22 am, the price of 24K gold stood at Dh497.25 per gram, a decrease from Dh499 observed on Monday. The 22K variety, commonly utilised in jewellery transactions, decreased to Dh460.50 from Dh462. The recent downturn follows the peak of Dubai gold rates, which reached Dh503 on both July 4 and July 5, representing the highest point recorded this month. Prices commenced July at Dh489.75 for 24K and Dh453.50 for 22K, subsequently rising through the initial weekend before experiencing a decline over the last two sessions. The move provides UAE shoppers with a marginally improved entry point relative to the weekend peak, although rates continue to exceed their levels at the beginning of the month. The 24K rate remains Dh7.50 elevated compared to July 1, whereas the 22K rate is Dh7 above the level observed at the beginning of the month. This indicates that consumers are experiencing a degree of relief from the recent peaks, although there has not been a complete restoration to the prices observed earlier in the month.

Globally, bullion experienced a decline for the second consecutive day as renewed assaults on shipping in the Strait of Hormuz reignited apprehensions regarding energy transportation through one of the most critical corridors for oil and natural gas. Gold experienced a decline of up to 0.9%, approaching $4,125 per ounce, following a 0.3% decrease on Monday. Oil prices increased following a report of a tanker being struck east of Oman, alongside reports indicating that Iran launched missiles at commercial vessels navigating the Strait of Hormuz. The increase in oil prices has reignited concerns about inflation, drawing greater scrutiny on the potential for the US Federal Reserve to maintain a tight policy stance or contemplate additional rate adjustments. Elevated interest rates typically exert downward pressure on gold, as the asset does not generate income. Linh Tran noted that gold has successfully rebounded after reaching its lowest point in almost six months, rising from approximately $3,940 an ounce to the $4,130 range. “At one point, buying pressure pushed prices close to the USD 4,200/oz zone before gold pulled back to its current level, suggesting that a recovery has emerged, but upside momentum is still not strong enough to confirm a clear breakout trend,” she said.

Investors are currently anticipating the release of the minutes from the Fed’s June meeting for new insights regarding the interest rate trajectory. Markets had previously increased their expectations for a rate hike following a hawkish position from new Fed Chair Kevin Warsh; however, those anticipations diminished after the release of weaker US jobs data last week. Tran indicated that the prevailing interest rate environment continues to be the primary constraint on gold’s potential for appreciation, as the market has yet to completely dismiss the possibility of a robust Federal Reserve policy approach. “In addition, although the DXY has cooled, it remains elevated around the 100.5–100.6 area, while the 10-year U.S. Treasury yield is hovering near 4.48%,” she said. “These remain two key sources of pressure on gold, as a stronger U.S. dollar and higher yields reduce the appeal of non-yielding assets.”

Gold continues to trade over 20% lower than the levels observed just prior to the outbreak of conflict in the Middle East. However, it has rebounded from a decline that saw it dip below the significant $4,000 threshold and critical moving averages. Tran indicated that the prevailing scenario is not wholly pessimistic, as the moderation of rate hike anticipations has aided in averting a sell-off from dominating the market, while opportunistic buying has consistently emerged around the $4,000 mark. “The USD 4,000/oz zone is acting as a major balance point for the market, where pressure from the U.S. dollar and yields is being offset by buying demand when prices fall deeply,” she said. she stated. A sustained hold above the threshold of 4,000 could enable gold to revisit the range of 4,180 to 4,200, with a potential advance toward 4,300 and 4,400 should momentum strengthen. A clear break below 4,000 would increase the risk of fresh selling in the short term.