Gold prices in Dubai witnessed further declines on Friday, reflecting the ongoing slump in global markets. The price for 24K gold dropped to AED 314.50 per gram, down from AED 315.75 on Thursday morning. Over the past week, 24K gold has seen a cumulative decrease of more than AED 6 per gram.
Other gold categories also saw declines, with 22K, 21K, and 18K trading at AED 291.25, AED 282, and AED 241.75 per gram, respectively.
Globally, spot gold traded at $2,606.65 in early trading, marking a continuation of recent price fluctuations. Rania Gule, a senior market analyst at XS.com, noted a slight recovery on Thursday after gold prices dropped below a critical level of $2,613 earlier in the week. This followed hawkish comments from the U.S. Federal Reserve, which have significantly influenced the precious metal’s performance.
Impact of Federal Reserve Policies
The Federal Reserve’s recent statements emphasized that inflation risks remain high, dampening prospects for substantial interest rate cuts in the near future. This policy stance has pushed yields on U.S. Treasury bonds to their highest levels since May, boosting the dollar’s strength while weighing heavily on gold.
“Rising bond yields play a key role in diminishing gold’s attractiveness as a store of value,” said Gule. “With the strength of the U.S. dollar, demand shifts toward yield-bearing assets, reducing gold’s appeal as markets focus on securing better returns.”
Outlook for Gold Prices
Market analysts suggest that gold prices are likely to remain under pressure in the short term due to ongoing monetary tightening and rising bond yields. As the Federal Reserve prioritizes inflation control, gold—a non-yielding asset—faces challenges in competing with yield-generating alternatives such as bonds.
Despite Thursday’s brief recovery, the metal’s downward trend has persisted, driven by investors seeking opportunities in more lucrative asset classes.
Dubai’s gold market, a popular hub for buyers and investors, is closely tied to global trends, making it particularly sensitive to shifts in international monetary policy and currency strength.
With current conditions favoring the U.S. dollar and Treasury bonds, gold prices may continue their decline unless broader economic or geopolitical factors shift investor sentiment toward safe-haven assets like gold.
The ongoing price volatility underscores the interconnectedness of global markets and the significant influence of central bank policies on commodity prices.
