Gold prices in Dubai fell sharply on June 19, giving jewellery buyers in the UAE some relief. The price of 24K gold dropped below AED500 per gram, falling to AED496.75 from AED509.25 the previous day. This AED12.5-per-gram decrease was one of the biggest daily drops in recent weeks.
Gold prices dropped across the board:
22K gold dropped to AED460.00 per gram.
21K gold fell to AED441.25 per gram.
18K gold was priced at AED378.00 per gram.
The fall in gold prices in Dubai followed a decline in the global gold market, where spot gold prices dropped by 2.4%.
Gold is on track for its third straight weekly decline as investors rethink the outlook for US interest rates. The Federal Reserve kept interest rates unchanged at its latest meeting. However, its comments suggested that rates could still be high for longer, which investors saw as a sign of tighter monetary policy.
As a result, the US dollar strengthened, and Treasury bond yields increased. Higher yields make interest-earning investments more attractive than gold. Silver prices also fell, dropping more than 4% and trading at about 233.66 AED ($63.63 per ounce) during the June 19 session.
Ahmad Assiri, Research Strategist at Pepperstone, stated that gold is taking direction primarily from monetary policy developments.
He said, “While policymakers left rates unchanged, markets see the accompanying presser as relatively hawkish, prompting investors to reassess the likelihood that borrowing costs remain elevated for an extended period with now 40% probability of a rate hike in the next FOMC meeting.”
He further added, “This stance has pushed US Treasury yields and the US dollar higher, creating a challenging backdrop for the precious metal. Gold becomes less attractive when investors can earn stronger returns from fixed income securities, while a firmer dollar above the 100 mark also makes bullion more expensive for international buyers.”
This shift in expectations has supported both Treasury yields and the US dollar. A stronger dollar increases the cost of gold purchases for overseas buyers, which can limit demand in international markets.
Assiri stated that geopolitical events are not affecting gold prices in the short term. Investors are focusing on economic data and what it could mean for future Federal Reserve decisions. They are closely watching US economic reports to see whether interest rates will stay the same or lower in the future.
The recent ceasefire agreement between the United States and Iran has also reduced worries about higher energy prices. As a result, oil prices have fallen, removing one of the reasons investors were buying gold as a safe-haven asset.
Inflation lingers as an important issue for financial markets and central banks. Assiri said that ongoing price increases are influencing expectations about future interest-rate decisions. Many investors now believe interest rates may stay high for a longer time. A stronger US dollar and higher bond yields have added pressure on gold prices. However, the lower gold prices have made gold jewellery more affordable and attractive for buyers in Dubai.
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