Gold prices experienced a decline in Dubai as the markets opened on Thursday. Data from the Dubai Jewellery Group indicates that the 24K variant of gold was trading at Dh290 per gram, a decrease of half a dirham per gram compared to the previous night's closing price. Meanwhile, the prices for 22K, 21K, and 18K gold stood at Dh268.5, Dh260, and Dh222.75 per gram, respectively, at the market's opening.
Spot gold prices rose to $2,393.29 per ounce, marking a 0.35% increase at 9.15am local time. Chris Weston, the head of research at Pepperstone, commented on the perplexing situation in the gold market, noting that gold's value has been fluctuating between $2,480 and $2,353. He explained that despite the widespread belief in a potential US economic downturn and a global growth slowdown, exacerbated by ongoing geopolitical tensions, gold prices have not reached above $2,500 as one might expect.
Weston further elaborated that the current market dynamics involve a widespread liquidation of well-held positions, where the traditional fundamentals supporting gold have been disregarded in favor of selling off various assets and purchasing bonds. He noted that with a more composed market sentiment, there has been an increase in the inflow of funds into gold ETFs and support for the 50-day moving average.
However, Weston pointed out that with the Japanese yen facing selling pressure and various equity indices showing signs of recovery, there is a noticeable reluctance to aggressively pursue gold's upward potential. Traders are cautious about the possibility of further liquidation in risk assets if economic data continues to weaken, reinforcing the predictions of a US recession. Weston concluded that if such a scenario unfolds, gold could potentially see increased demand as a hedge against recession, although the yen might be seen as a stronger portfolio hedge, which could limit gold's near-term upside until market clarity improves.
