Gold prices in the UAE took a dip, reaching a one-month low and trading below Dh230 per gram as the markets opened this Wednesday. The Dubai Jewellery Group reported that 24K gold started at Dh229.75 per gram, down from Dh231.0 per gram at the previous night’s close. This represents a decrease of Dh2.25 in value within just 24 hours. Similarly, the 22K, 21K, and 18K variants of gold also opened at lower prices, at Dh212.75, Dh206.0, and Dh176.5 per gram, respectively, at 9 am local time.
On a global scale, spot gold remained subdued at $1,896.54 per ounce by 9:15 am UAE time. It had recently fallen below the significant $1,900 mark, hitting its lowest level since August 23.
Vijay Valecha, Chief Investment Officer at Century Financial, explained that gold’s decline was due to the rise in long-term US Treasury yields and the strengthening US dollar. He also mentioned that the near-term technical outlook for gold is currently unclear.
Moreover, China’s local gold price premium has risen to unprecedented levels, reaching $121 per ounce on September 14. This high premium is a result of China’s heavy reliance on gold imports, making gold scarcer due to import controls and limited domestic production. The limited gold imports during July and August, coupled with increased wholesale demand, have boosted the Shanghai-London gold price premium. Additionally, short covering in the Shanghai-Comex futures spread might have contributed to this trend.
However, the rising gold prices in China have deterred demand recovery in 2023 and may continue to do so, potentially leading to weaker-than-expected sales during the upcoming Golden Week.