Gold prices slipped at the opening of the markets in Dubai on Thursday, but continued to trade in high territory due to geopolitical tension in the Middle East.
At 9am UAE, 24K gold was selling for Dh321.5 per gram, down half a dirham per gram from last night’s closing rate. The other variants also opened lower with 22K trading at Dh297.75, 21K at Dh288.90 and 18K at Dh247 per gram, respectively.
Spot gold was down 0.15 per cent at $2,656.2 per ounce at 9.10am, UAE time, on Thursday.
Rania Gule, senior market analyst at XS.com, said amid escalating geopolitical tensions in the Middle East and volatile economic data, gold is currently trading near $2,650.40, facing downward pressure that hinders its continued rise following a sharp recent increase. after developments in the Middle East escalated, prompting investors to seek it as a haven.
“However, the price quickly retreated, reflecting the persistent strength of the US labour market, which I believe limits the likelihood of significant monetary easing by the Federal Reserve. These gold movements highlight a delicate balance between geopolitical concerns and US economic expectations, where any deviation in economic data or political events plays a pivotal role in directing prices,” she said.
Gule added that a significant part of this pressure on gold stems from the strengthening US dollar, which continued to consolidate its gains over the past few days.
“The possibility of an escalation in the Middle Eastern conflict continues to cushion gold's decline. Political tensions in this historically volatile region play a key role in maintaining a certain level of support for gold prices. Despite the downward pressure exerted by the strengthening dollar and robust US labour data, there remains strong support for gold due to geopolitical fears. I believe these tensions are a fundamental driver for gold, and any diplomatic or military escalation could trigger new buying, limiting its losses,” said Gule.
Given these contrasting factors, investors are adopting a cautious approach to gold, viewing any price drop as a buying opportunity under the current circumstances, she added.
