Gold prices in Dubai slipped in early trade on Wednesday after reaching a new record high on Tuesday evening.
The Dubai Jewellery Group data showed the 24K variant of the yellow metal losing Dh1.75 to Dh321.5 per gram at the opening of markets on Wednesday, compared to Dh323.25 per gram when the markets closed on Tuesday.
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The prices hit an all-time high of Dh323.25 per gram in Dubai on Tuesday as the safe-haven commodity’s demand grew due to the escalating military conflict between Israel, Iran and Hezbollah. On Tuesday, Iran launched an attack on Israel with 200 missiles.
Among the other variants, 22K, 21K and 18K rates dropped to Dh297.75, Dh288 and Dh247 per gram, respectively.
Spot gold was down 0.24 per cent at $2,654.06 per ounce at 9.07am, UAE time.
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Naeem Aslam, chief investment officer at Zaye Capital Markets, said gold traders have enjoyed the rally in gold prices on the back of the weakness in the dollar index. “If we begin to see an improvement in the dollar index’s price, we could see a different reaction among traders, which could translate into a new trend that bulls may not like.”
Vijay Valecha, chief investment officer of Century Financial, said the downturn in gold prices was primarily attributed to Federal Reserve Chair Jerome Powell’s hawkish stance on the economy.
“Powell hinted at a potential for two more 25bps interest rate hikes this year, which dampened expectations for more aggressive monetary easing and strengthened the US dollar. Consequently, investors shifted away from gold, a non-yielding asset, leading to a price drop. Currently, markets estimate a 35 per cent probability of a 50-basis-point rate cut in November, down from 58 per cent just last week, as indicated by the CME FedWatch Tool,” he said.
Valecha expects fold prices to remain volatile as investors closely monitor a series of US economic indicators this week.