Dubai gold prices drop further ahead of Indian festivals Navratri, Diwali

The 24K gold price fell to Dh496.75 per gram at the market open on Tuesday, down from Dh498.50 per gram at the close of markets on Monday. It has lost Dh37 per gram over the past month.

Gold prices have fallen in Dubai and across the UAE just ahead of the Indian festive season, bringing some relief to shoppers preparing for Navratri, Dhanteras and Diwali. As reported by media earlier, the drop has encouraged some expatriate and non-resident Indian (NRI) families to bring forward their festive gold purchases, with prices falling below Dh500 per gram.

Chris Weston, head of research at Pepperstone, said the short-term investment case for gold remains challenged.

“Price, the key driver of sentiment and flows, continues to look heavy and remains in a short-term downtrend. Rallies are quickly being sold, and sellers remain firmly in control. A break below the recent lows around $4,110 looks increasingly probable and could accelerate selling towards $4,100 and potentially $4,000, where we saw strong demand through June, July and August,” he said.

For now, according to Weston, it remains a seller’s market. “We would need to see a break above $4,275 to become more constructive on the near-term upside.”

He added that at the heart of the weakness is the increasing opportunity cost of holding gold, with several traditional macro inputs working against the investment case.

“We’re seeing limited inflows into the GLD ETF or gold miners’ ETFs, while the US dollar remains well supported, with the USD index holding above 102 and around multi-year highs. US 10-year real yields have pushed to around 2.93 per cent, having moved sharply higher through August and September and sitting around cycle highs. That has become a significant headwind for a non-yielding asset such as gold,” Weston added.