Dubai: Gold prices oscillated between gains and losses all through Tuesday, as traders weighed where the Federal Reserve is headed on rates and whether talks to end the Iran war will produce a deal.
In the UAE, the yellow metal has opened Wednesday on the lower side. 24- karat is priced at Dh496 versus Dh497.25 last evening. 22-karat is trading at Dh459.25 while 18-karat is being priced at Dh377.50 per gram.
The metal ranged from a 0.4 per cent rise to a 0.7 per cent drop during the session. Negotiations between the US and Iran are still under way and hopes of a breakthrough seem slim, adding to traders woes. The dollar and bond yields slipped, and oil trimmed its losses after an earlier slide triggered by an unverified report that a breakthrough could arrive this week.
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Oil and other energy prices stayed high, which keeps inflation worries alive and could push the Fed to raise rates again before the year ends. Higher rates weigh on gold because it pays no interest.
“Gold faces a combination of costly energy, persistent inflation, and expectations of restrictive monetary policy. The $4,100 area provides an immediate reference point, while the Fed meeting and subsequent PCE release could determine the next significant move,” says Antonio Di Giacomo, Senior Market Analyst at XS.com.
Gold has moved within a narrow band through October. Investors are trying to gauge the Fed’s next step after it lifted rates in September for the first time since 2023. Markets now put the odds of another quarter-point hike at the October 27-28 meeting at 15 per cent. Chairman Kevin Warsh’s remarks last week were read as supporting a pause, although he did not commit to a decision and said he would not “prejudge” meetings. Most Fed officials have penciled in at least one more increase this year.
With inflation still above the 2 per cent target, investors are watching whether policymakers hold off this month and then resume tightening later.
Spot gold dropped 0.04 per cent to $4,124.31 as of 09:30 am in Dubai. Silver dropped 0.75 per cent to $57.39. Platinum rose and palladium declined. The Bloomberg Dollar Spot Index, which tracks the US currency, slipped 0.2 per cent.