Despite some volatility in gold prices, investors still see dips as buying opportunities as they see the precious safe-haven metal as a good buy due to the geopolitical tensions around the world.
Gold prices surpassed $4,700 an ounce in early May but fell below $4,500 in the last quarter of May due to the higher oil prices raising concerns around inflation in the US economy.
The precious metal closed at $4,539.76 per ounce, up 0.84 per cent.
In the UAE, 24K and 22K gold prices closed at Dh547.5 and Dh507.0 per gram, respectively. The 22K gold price fell below Dh500 per gram on May 27.
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“Price action near the $4,400 level indicates that investors still view dips as buying opportunities to rebuild long positions. As long as the situation surrounding Iran, regional energy infrastructure, and maritime transit through the Strait of Hormuz remains unresolved, gold is highly likely to maintain a geopolitical discount,” said Ahmad Assiri, Research Strategist at Pepperstone.
“Though, I suspect that a positive sentiment should dominate the setup should the price action retest and hold the $4,580–$4,600 range, which is the nearest resistance levels,” he said.
The yellow metal briefly dipped below the $4,400 per ounce threshold, the lowest in two months, before staging a sharp intraday rebound, rallying by over $100 in the same session. This price action underscores the market’s continued sensitivity to evolving headlines surrounding Iran and the Strait of Hormuz.
Gold prices eased last week after the US and Iran were reportedly close to reopening the Strait of Hormuz and reaching a peace deal, but the two parties didn’t reach a deal. On Saturday, US President Donald Trump reportedly asked for tougher terms in a proposed Iran war deal.
Moreover, US forces in the Gulf of Oman intercepted and disabled a commercial vessel that was attempting to reach an Iranian port.
“Lingering inflationary pressures and the prospect of higher yields as pricing out rate cuts have increased US Treasury yields and the US dollar to some extent, effectively capping gold’s upside potential,” added Assiri.
According to Linh Tran, market analyst at xs.com, geopolitical risks, oil price volatility, and concerns over energy-driven inflation remain underlying support factors for gold.
“These factors have prevented investors from fully moving away from safe-haven assets, especially as financial markets remain highly sensitive to signals from the Fed, the US dollar, and US Treasury yields,” she said, adding that in the short term, whether gold can hold above the $4,500 an ounce area will determine whether the recovery can extend further or remain only a rebound after a sharp sell-off.
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