UAE: Gold prices continue to rise in Dubai during new year

'Ongoing recession concerns and geopolitical tensions are likely to lift gold's safe-haven appeal in 2023,' says expert

A Staff Reporter

Published: Wed 4 Jan 2023, 9:42 AM

Gold prices edged higher on Wednesday morning, supported by a pullback in the dollar, although caution prevailed as investors awaited minutes from the Federal Reserve's December policy meeting that could offer hints on the US central bank's tightening path.

Spot gold was up 0.51 per cent at $1,846.44 per ounce as of 9.15 am UAE time.

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In the UAE, 24K gold price rose Dh0.75 per gram to trade at Dh223.75 per gram at the opening of the markets on Wednesday.

Meanwhile, 22K, 21K and 18K were trading at Dh207.25, Dh200.5 and Dh172.0 per gram, respectively.

The dollar index slipped 0.2 per cent, after scaling a two-week high on Tuesday. A weaker dollar makes bullion cheaper for other currency holders.

Minutes from the Fed's December 13-14 policy meeting are due at 7pm GMT (11 pm UAE time). The US central bank had raised rates by 50 basis points (bps) in December after four straight hikes of 75 bps each.

"Traders remain cautious ahead of the Fed minutes. The minutes will likely give an idea about the Fed's policy decisions and this will impact the dollar and gold," said Hareesh V, head of commodity research at Geojit Financial Services.

"Ongoing recession concerns and geopolitical tensions are likely to lift gold's safe-haven appeal in 2023. There are chances of more inflows to gold when the Fed starts easing policies," he said.

Edward Moya, senior market analyst at Oanda, said gold is riding a nice wave of falling Treasury yields, safe-haven flows as recession risks rise, and an improving outlook for jewellery demand across China and India.

“Gold should have a strong start to the New Year as much of Wall Street goes defensive. The precious metal should see strong inflows as stock market sellers appear to be clearly in control. Inflation might prove to be harder to bring down and that should keep the risks elevated that the recession that hits the US economy could be harsher than what most are anticipating. The Fed will remain loud and clear that a lot of work remains to bring down inflation,” said Moya.

He said the yellow metal has massive resistance at the $1,900 level, but it could be tested by the end of the quarter.

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