Gold prices continued to trade below Dh500 per gram after falling below the key milestone on Tuesday, despite making a slight recovery in the early morning.

The Dubai Jewellery Group data showed 24K trading at Dh497.25 per gram at the opening of the markets on Wednesday, while 22K, 21K, and 18K were selling at Dh460.5, Dh441.5, and Dh378.25 per gram, respectively.

However, prices recovered from last night's close when 24K, 22K, 21K, and 18K ended at Dh495.50, Dh458.75, Dh440, and Dh377 per gram, respectively.

Spot gold was trading at $4,146 per ounce, up 1.1 per cent at 9.20 am UAE time.

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Bas Kooijman, CEO and asset manager of DHF Capital, said gold tumbled more than five per cent on Tuesday, marking its steepest one-day drop since August 2020, as a stronger US dollar and heavy profit-taking pressured prices after recent record highs.

“Reduced fears over US-China tensions, optimism that the government shutdown could end soon, and easing concerns over US regional banks boosted the dollar to its highest level in almost a week. This improved risk sentiment could reduce safe-haven demand and accelerate the pullback in gold. Even so, geopolitical risks in Eastern Europe and the Middle East, alongside expectations of US Federal Reserve rate cuts, continue to offer a supportive backdrop, suggesting the metal could find buyers on dips,” said Kooijman.

Joseph Dahrieh, managing principal at Tickmill, said yellow metal edged lower on Tuesday as investors took profits following recent record highs, while signs that the US government shutdown could be resolved this week could add to the selling pressure.

“White House officials suggested negotiations were progressing, easing some investor anxiety and reducing demand for defensive positioning. Even so, bullion continues to trade near historic levels, supported by expectations of Federal Reserve rate cuts, with markets still pricing in a 25-basis-point move later this month and another in December,” he said, adding that the metal's underlying resilience remains evident in investment flows as gold-backed ETFs attracted 59 tonnes in the week ending October 17, the strongest inflow since July 2020 at the height of the pandemic.

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