Gold shoppers in Dubai are catching a bit of a break this week. Prices dropped further on Tuesday morning, with a stronger US dollar and rising Treasury yields putting pressure on the precious metal once again.
24K gold opened at Dh496.75 per gram on Tuesday, down from Dh498.50 at Monday’s close. Zoom out a bit further, and the picture gets even more interesting: gold has now shed Dh37 per gram over just the past month.
The other popular variants followed the same downward trend. 22K slipped to Dh460.00, 21K dropped to Dh441.00, and 18K settled at Dh378.00 per gram on Tuesday morning. On the global front, spot gold was also down 0.18 per cent, trading at $4,122 an ounce.
Perfect Timing for Festive Shoppers
As it happens, this dip couldn’t have come at a better time for a lot of families. With Navratri, Dhanteras, and Diwali all approaching, gold prices slipping right before the festive season is giving shoppers some much-needed breathing room.
As Khaleej Times reported earlier, the falling prices have already pushed some expatriate and non-resident Indian (NRI) families to increase their festive gold buying, especially now that prices have dropped below that psychological Dh500 per gram mark.
What’s Driving the Price Drop?
According to Chris Weston, head of research at Pepperstone, the short-term outlook for gold still isn’t looking particularly strong. He pointed out that price action, which tends to shape overall market sentiment, continues to look weighed down and stuck in a short-term downtrend.
“Rallies are quickly being sold, and sellers remain firmly in control,” Weston said. He also flagged that a break below the recent lows near $4,110 is becoming increasingly likely, which could push selling further toward $4,100, and possibly even down to $4,000, a level that saw strong buying interest back in June, July, and August.
For now, Weston believes sellers are firmly holding the upper hand in the market. “We would need to see a break above $4,275 to become more constructive on the near-term upside,” he added.
The Bigger Picture Behind Gold’s Weakness
Weston also explained that a big part of what’s weighing gold down right now comes from the rising opportunity cost of simply holding onto it, especially with several key macro factors working against it at the moment.
“We’re seeing limited inflows into the GLD ETF or gold miners’ ETFs, while the US dollar remains well supported, with the USD index holding above 102 and around multi-year highs,” he said. On top of that, US 10-year real yields have climbed to around 2.93 per cent, having risen sharply through August and September and now sitting close to cycle highs.
That combination, a strong dollar paired with high real yields, has become a real headwind for gold, especially since it’s an asset that doesn’t generate any yield of its own.
For now, festive shoppers in Dubai seem happy to take advantage of the dip while it lasts, even as analysts keep a close eye on where prices head next.
In other Dubai news this week, the city has also been making headlines for reasons beyond gold. Dubai recently unveiled a massive new mall bringing over 360 stores to Al Khail Road, and separately, it also began granting Golden Visas to its best performing teachers as part of a wider push to recognize talent across the education sector.