Gold prices moved higher in Dubai and globally on Friday morning, rising over Dh2 a gram in early trade.
The 24K gold price was trading at Dh503.0 per gram on Friday morning, up from Dh500.75 per gram at the close of the markets on Thursday.
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Among the other variants of the yellow metal, 22K, 21K and 18K were selling at Dh466.9, Dh446.75 and Dh363.0 per gram, respectively.
Spot gold was trading at $4,173 an ounce at 9.30 am UAE time.
Carsten Menke, Head of Next Generation Research at Julius Baer, said a higher-than-expected inflation number in the US earlier this week reinforced fears of further interest rate increases by the US Federal Reserve, in turn putting pressure on gold and silver prices.
“Beyond these short-term and typically sentiment-driven moves, we believe the fundamental backdrop remains unchanged. We see limited short-term upside for gold and silver as long as the Fed remains in inflation-fighting mode. In the longer term, growing concerns about US indebtedness and the associated interest burden should provide support. The gold/silver ratio is now back at levels we consider reasonable, prompting us to close our long position,” Menke added.
He added that the gold and silver markets did not like the US inflation data.
“A higher headline number, which includes energy prices, reinforced fears of further interest rate increases by the US Federal Reserve. Gold was down as much as 2% after the release, while silver fell twice as much. Beyond these short-term moves, which are typically sentiment-driven, we believe the fundamental backdrop for gold and silver remains unchanged. We see limited upside as long as the Fed is in inflation-fighting mode. The downside should be limited as well, assuming that the Fed will raise interest rates less frequently than currently priced into money markets,” he added.