Gold prices in Dubai rose beyond the Dh500 per gram level on Friday. This comes after the poor performance of US job creation figures, which led to the strengthening of the international price of gold. This rebound follows gold dropping to its lowest level in close to one month, providing a temporary respite for jewelry shoppers.
The latest US non-farm payrolls report showed that the American economy added only 57,000 jobs in June, much lower than market expectations. This weak performance of the labor market led investors to cut expectations of a further increase in interest rates from the Federal Reserve.
Gold generally performs well when expectations for higher interest rates weaken. Lower interest rates reduce the opportunity cost of holding gold, making the metal more attractive to investors. In addition, the weaker US currency was also a factor supporting the rally.
Following the global surge, Dubai's retail gold prices also advanced. The price of 24K gold rose above Dh500 per gram to around Dh503.50, while 22K, 21K and 18K variants also recorded gains.
The rebound erased much of the price correction seen earlier this week, when falling bullion prices encouraged jewellery buyers to consider fresh purchases. Retailers believe that consumers will be watching the price movement closely during the upcoming summer vacation and wedding season.
Investors are now waiting for the release of economic data in the US for any more signals regarding the policies of the Federal Reserve. If economic growth starts to slow down or inflation starts to ease, market expectations of rate cuts will strengthen, which would further boost the price of gold.
Other reasons cited by analysts include ongoing central bank buying and geopolitical uncertainties, but the gold price can be volatile given changing economic data and the Fed's signals.
Also Read: Dubai Gold Price: Gold Price Today Drops to AED 14,690 as UAE Rates Track Global Weakness