Dubai gold prices recovered on Thursday following a steep decline earlier this week. The 24-carat gold improved by AED2.25 to AED496.5 per gram, while 22-carat gold inched closer to AED459.75. The 21-carat and 18-carat gold improved to AED440.75 and AED377.75, respectively.
On October 21, Dubai witnessed a drastic decline in bullion rates, with 24-carat gold sliding to AED497.25 per gram and silver to AED163.90 per gram. The sudden correction followed a week-long rally that pushed gold prices to record highs, prompting investors to book profits as the US dollar strengthened.
Spot gold globally gained 0.95% to $4,088.58 an ounce at 4:37 GMT, while December US gold futures rose 0.77% to $4,094.60. Even though it increased marginally, the metal remained under pressure from a stronger US currency, which rose 0.17% to 99.06, making gold pricier to holders of other currencies.
Ole Hansen, Saxo Bank’s head of commodity strategy, stated that the market entered a healthy phase of correction following the prolonged rally. “The risk of correction in gold and silver has been increasing steadily, although strong pre-Diwali buying gave some cushioning,” he said. “A stronger dollar, reinstated risk appetite in equities, and weaker post-Diwali physical Asian demand have put traders on guard.”
Investors are expecting the lagging US Consumer Price Index (CPI) report to be released this Friday. The report should indicate core inflation remaining at 3.1% in September. Markets have almost factored in a 25-basis-point interest rate cut at next week’s Federal Reserve meeting, a move that can continue to support gold by reducing the opportunity cost of owning the non-yielding asset.
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Gold rose almost 56% so far this year, reaching an all-time peak of $4,381.21 on Monday before falling sharply. The metal will likely remain volatile in the short term as investors monitor US policy actions and the direction of the dollar. However, with ongoing geopolitical tensions and consistent central bank demand, the medium-term picture for gold remains generally bullish.