Gold prices in Dubai remain unchanged amid expectations of improved Israel-Iran relations, as fears over heightened tensions in the Middle East subside. Market participants are now focusing on US inflation reports and the outlook for Fed interest rates, which may influence gold prices moving forward.
The current state of gold prices is a clear sign of the changing market sentiment. As geopolitical risks appear to be easing, market participants become more inclined to consider other factors that may affect gold prices.
In the Dubai market, 24K gold opened at Dh522.25 per gram, slightly higher than Monday’s closing level of Dh521.50. Other variants also remained broadly unchanged.
The price of 22K gold stood at Dh483.50 per gram, while 21K and 18K gold traded at Dh463.50 and Dh397.25 per gram, respectively. The limited movement indicates that buyers and sellers are awaiting stronger market triggers before taking fresh positions.
Ahmad Assiri, research strategist at Pepperstone, said gold prices have retreated toward the $ 4,300-per-ounce level. He further explained, “Overnight developments point to a modest cooling in tensions between Israel and Iran after both sides signaled a halt to direct military exchanges following efforts led by the US. The headlines suggest that markets may be witnessing the release of accumulated tensions, rather than the beginning of a new episode of escalation many had feared.”
Looking ahead, market players are carefully analyzing US inflation data, including the Consumer Price Index and Producer Price Index reports. New findings from the analysis of inflation data may indicate the Fed's future policy actions. Rising inflation will increase expectations of prolonged high US interest rates.
When interest rates rise, the attraction of non-yielding assets like gold decreases. Thus, changes in inflation expectations may affect gold prices going forward.
According to analysts, gold price fluctuations are expected to be driven by political news, oil prices, US Treasury rates, and the US dollar. Despite decreasing current geopolitical tensions, traders continue to worry about the overall economic situation.
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