Gold prices in Dubai have been rallying over the past couple of years, but the rally may not continue, going forward, due to“accumulated overbought conditions”.

Therefore, according to an analyst, there are higher chances of prices going down, rather than going north.

The price of 24K in Dubai has been seesawing around Dh400 per gram and 22K is fluctuating around Dh375 per gram over the last few months.

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“The tedious seesaw for gold is about to end,” says Alex Kuptsikevich, chief market analyst at the FxPro.

“This tedious five-month movement to the right is likely to end in the coming weeks, as August often marks the start of major trends in gold. The duration of consolidation is often directly proportional to the strength of the breakout. From a technical analysis perspective, given the accumulated overbought condition, the downside potential is huge - up to $3,000 or even $2,200 per ounce. However, the upside potential is no less impressive: $4,600 in an extreme bullish scenario, including the US Federal Reserve switching to a mode of absolute softness,” said Kuptsikevich.

On Monday, the Dubai Jewellery Group data showed 24K trading at Dh405.5 per gram at the opening of the markets, down from Dh406.25 per gram at the close of the markets over the weekend.

Among the other variants of the precious metal, 22K, 21K, and 18K opened lower at Dh375.5, Dh360.25, and Dh308.75 per gram, respectively.

Globally, spot gold was trading at $3,364.76 per ounce, down 0.23 per cent.

“The US Federal Reserve is likely to ease monetary policy in September. However, it may then pause again. Its slowness is bringing investors' interest back to the greenback. Clouds are gathering over the precious metal due to US President Donald Trump's efforts to end the armed conflict in Ukraine. The start of hostilities, followed by the West's freezing of Russia's gold and foreign exchange reserves, was the starting point for the Gold's rally. Since February 2022, gold has risen by 1.7 times and reached a record high of more than $3,500 per ounce in April. The rally was driven by de-dollarisation, active buying of bullion by central banks, and increased demand for ETFs,” he said.

In the second quarter, he elaborated, central bank activity in the precious metals market declined significantly, and capital flows into specialised exchange-traded funds slowed.“Without these advantages, gold can forget about recovering the upward trend. However, the favourable external background in the form of monetary stimulus from the Fed, lower Treasury yields, and a weaker US dollar in the medium term will give gold a boost,” he added.

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