Gold Prices Drop in UAE as Global Trends Impact Markets

Gold prices in the United Arab Emirates (UAE) saw a significant drop of over Dh3 per gram on a Wednesday morning, influenced by the latest global market developments, particularly ahead of the US Federal Reserve’s policy decision regarding interest rates.

Dubai Jewellery Group Data:

According to data from the Dubai Jewellery Group, the 24K variant of gold opened the market at Dh239.5 per gram on Wednesday. 

This represented a decrease from the previous night’s closing price of Dh242.75, marking a decline of Dh3.25 per gram.

Gold prices for various karats also experienced reductions at the market opening. 

For instance, 22K, 21K, and 18K gold were traded at Dh221.75, Dh214.5, and Dh184.0 per gram, respectively.

Decline in Spot Gold:

Global spot gold prices fell by 0.36 percent to $1,976.74 per ounce as of 9.10 a.m. UAE time. This decline in the precious metal’s value is partly attributed to the ongoing global financial developments.

Alex Kuptsikevich, senior market analyst at FxPro, noted that sentiment in the gold market has shifted as the price approached the psychologically significant level of $2,000 per ounce. 

Some speculators took advantage of the roughly $200 increase from the $1,810 level reached on October 6 to secure profits.

Technical Analysis of Gold’s Performance:

Kuptsikevich also commented on the technical aspects of gold’s performance, highlighting that, despite being in an oversold territory, the price continued to rise. 

Even a brief dip below this line last week did not result in a significant correction, and buyers quickly returned, pushing the price to new local highs.

Historical Gold Price Movements:

Gold has broken through the $2,000 mark three times in the last three years, with each instance followed by a rally to $2,070 and subsequent pullbacks. 

In 2020 and 2021, gold dropped below $1,800, while in 2022, the price approached $1,620. A decline in September temporarily took the price to $1,810 before it rebounded.

Impact of Government Bond Yields:

Kuptsikevich explained that attractive yields on government bonds justify the selling of gold under the current circumstances. 

The gold market is showing signs of peaking, which could lead to a shift of capital from gold into bonds, particularly in the absence of a real risk of default on US and major eurozone government bonds.