(MENAFN- Khaleej Times)

Gold prices continued to hold steady on Wednesday morning in a phase which analysts described as one of“slight correction or short-term consolidation”.

Globally, spot prices fell to $3964.9 per ounce at 10am UAE time, while silver stood at $47.68. In Dubai, the price of 24K rose slightly to stand at Dh478.50 on Wednesday morning. Similarly, 22K, 21K and 18K stood to Dh443, Dh424.75, and Dh364 per gram, respectively.

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According to Vijay Valecha, Chief Investment Officer, Century Financial, precious metals have shown“robust strength” amid the various economic uncertainties and trade tensions.“However, news of easing tensions between the world's largest economies, the US and China, led to some safe-haven demand waning, along with a general profit-booking trend after such drastic rallies,” he said.

“Before the sell-off, investors who had been holding the yellow metal since the start of the year were seeing about 67 per cent profits, making it an opportune time to book profits once a slight price pullback was seen. Despite the correction, the precious metal is still up 51 per cent year to date, demonstrating its significant outperformance relative to other asset classes.”

Resistance point

He added that this is a crucial period for gold.“The recent price movements, which have been somewhat range-bound, could be seen as a bearish consolidation, hinting that the pullback from October's record high might still have some room to go,” he said.“On the technical side, gold is trading below the 9-day simple moving average of $4,015. The 9-day SMA has been acting as a resistance point, with gold getting pushed back twice at that level in recent sessions. Until gold can break through decisively, this level will likely serve as a near-term hurdle for any upward movement. On the flip side, if it dips below $3,950, it could pave the way to the next support level at $3,887, which was last week's low.”

However, he added that the macro risks continue to be constructive.“The US government shutdown is starting to impact economic sentiment,” he said.“If the shutdown drags on, it will postpone important data and obscure the Fed's policy outlook with more uncertainty, making gold more appealing. Furthermore, geopolitical fears and, specifically, strong demand from central banks are a constructive layer under gold.”

He concluded that while a short-term decline or sideways movement is possible, the overall trend in gold remains upward. "A break below key support levels would provide some confidence in the continuation of a deeper pullback," he said. "Otherwise, this could simply be a healthy pause or correction before another leg high."

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