GOLD PRICES STEADY IN DUBAI AS US-IRAN TENSION WEIGHS
Gold prices were steady in Dubai on Friday morning as investors bet on US interest rate hikes amid the US-Iran military conflict.
The 24K gold price was trading at Dh495.75 per gram, up from Dh495.25 per gram at the close of the markets on Thursday.
Among the other variants of the yellow metal, 22K, 21K, 18K, and 14K were trading at Dh459.0, Dh440.25, Dh377.25 and Dh294.25 per gram, respectively.
Spot gold was trading at $4,117.95 an ounce, down 0.34 per cent. Silver was trending down as well, trading at $60.24 an ounce, down 0.13 per cent.
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Ahmad Assiri, research strategist at Pepperstone, said gold's recovery has lost steam after a brief rally, with the market shifting back into a more cautious tone.
“The renewed escalation in geopolitical tensions surrounding the Strait of Hormuz has weighed on broader market confidence, and gold retreated back towards the $4,100 level. At the same time, crude oil has moved higher as markets price a greater probability of supply disruptions and hence feeding into greater inventory shortages,” he said.
Precious metal investors remain reluctant to build strong long positions as US Treasury yields stay elevated and uncertainty over the Federal Reserve’s policy path persists, added Assiri.
“Adding to the pressure, higher energy prices resulting from the renewed tensions could delay the global disinflation process, and in turn, keep yields elevated. Although markets have modestly reduced expectations for further rate hikes in the short term, yields remain sufficiently high to limit gold appeal in the current environment.”
According to Assiri, gold’s medium-term outlook remains constructive relative to the significant selling pressure seen in recent weeks, but the near-term bias is still cautious. The market appears to have moved away from expectations of a decline towards the $3,900 region, yet it also lacks a convincing catalyst for a sustained move back above $4,200.
“Much of that uncertainty stems from the Fed and the return of geopolitical risks. Until the market gains greater confidence on the direction of US interest rates, gold is likely to remain caught between geopolitical [risks] and the headwind of elevated rates,” he concluded.
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