Gold prices saw a significant drop in Dubai on Monday, marking a notable decline of more than Dh3 per gram across all major variants. The downturn in local rates aligns with global trends, where the yellow metal registered a fall of over one per cent in early trading on the first business day of the week.
At 9:00 am UAE time, the price of 24K gold in Dubai fell to Dh318.25 per gram, down Dh3.25 from the weekend’s closing rate of Dh321.5. Other variants also followed suit, with 22K gold priced at Dh294.5, 21K at Dh285.25, and 18K at Dh244.5 per gram.
Globally, spot gold was trading at $2,627.91 per ounce at 9:10 am UAE time, representing a decline of 0.91 per cent. The sharp drop comes as the market shows signs of caution, even at the current historically high levels.
Market Trends and Analysis
The plunge in gold prices follows a four per cent drop at the start of the previous week, driven by news of a ceasefire between Lebanon and Israel. While the market showed recovery from Tuesday to Friday, this week’s opening suggests renewed bearish sentiment. Analysts attribute the fluctuations to technical factors and geopolitical developments.
“The price found support at $2,600 per ounce, which also provided a crucial level in late September and early October,” explained Alex Kuptsikevich, chief market analyst at FxPro. He noted that the current dip below the 50-day moving average signals a shift in momentum, with bearish forces taking control.
Kuptsikevich emphasized the importance of confirmation in the coming sessions. “A further drop below $2,600 would set the stage for sellers to target the month’s lows at $2,540, with the potential for prices to decline toward $2,400. In the long term, the $2,000 per ounce level could come into focus.”
Conversely, a weekly or monthly close above $2,670 might indicate a reversal, allowing gold to reclaim territory above the 50-day moving average and potentially resuming an upward trajectory.
Cautious Buying Prevails
Despite the decline, last week’s rally between Tuesday and Friday suggested sustained interest from buyers, albeit cautiously. Industry observers believe this reflects ongoing investor appetite for gold as a hedge against economic uncertainty, inflation, and geopolitical risks.
Dubai’s gold market, a regional hub for precious metals, is particularly sensitive to global price movements, with local rates fluctuating in tandem with international benchmarks.
Outlook for Gold Investors
With gold prices teetering around critical support levels, analysts recommend close monitoring of technical indicators and geopolitical developments. Kuptsikevich’s projections highlight the importance of price behavior around the $2,600 mark as a determinant of near-term market direction.
While the current dip presents challenges for short-term traders, long-term investors may view the correction as an opportunity, particularly if prices stabilize or rebound above key resistance levels.
As the year-end approaches, market participants will be watching closely to see if gold can regain its footing and build on the cautious optimism seen during the mid-week rally. For now, the market remains at a crossroads, with bearish and bullish forces vying for control.