Gold Prices Pause in the UAE After Two-Day Rally

Gold prices in the UAE took a slight dip on Wednesday morning, pausing after a two-day rally. The data from the Dubai Jeweler Group indicated that 24K gold was trading at Dh225.25 per gram, compared to Dh225.5 on the previous day. 

Meanwhile, 22K, 21K, and 18K were trading at Dh208.5, Dh201.75, and Dh173.0 per gram, respectively. Spot gold was trading at $1,859.24 per ounce as of 9:48 a.m. UAE time, marking a 0.03% decrease.

One-Week High and Factors Behind Gold’s Movement:

Gold prices had reached a one-week high, partly attributed to a slight decrease in the US dollar. 

Several US Federal Reserve officials suggested that the recent surge in Treasury yields might make further rate hikes unnecessary. 

Additionally, the Israel-Palestine conflict at the week’s start contributed to the gold prices rally.

FOMC Minutes and Inflation Expectations:

Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, pointed out that the Federal Open Market Committee (FOMC) minutes due that day will remind investors that interest rates will remain higher for an extended period if inflation continues to exceed the target. 

The expectation was for a softening in inflation, particularly for producer and consumer prices, partly influenced by falling US gasoline prices since mid-August.

Risk in US Yields:

Ozkardeskaya also mentioned that despite the dovish Fed talk and the safe-haven inflows into US treasuries amid growing tensions in the Middle East, risks in US yields are still tilted to the upside. 

The US 2-year yield remains 50 basis points above the upper range of the Fed funds policy target.

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