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Gold prices continued to inch higher, crossing Dh500 per gram again at the opening of the markets on Wednesday morning.

The 24K variant of the precious metal hit Dh501.5 per gram on Wednesday, up from Dh499.75 per gram at the close of the markets on Tuesday. It crossed the Dh500 mark in October also.

According to Dubai Jewellery Group data, 22K, 21K and 18K were trading at Dh464.25, Dh445.25 and Dh381.5 per gram, respectively.

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Spot gold was trading at $4,166.43 per ounce, up 0.58 per cent.

Linh Tran, market analyst at xs, said gold prices are entering an important phase as they are supported by multiple factors.

“The recent recovery in gold is not only driven by a weakening US dollar or declining yields, but also reflects changes in monetary policy expectations, the inflation outlook, the health of the US economy, and safe-haven flows. When these factors all lean in the same direction, gold has a solid foundation to continue maintaining its short-term upward momentum,” said Tran.

“Inflation is the key factor to watch in the coming weeks. Economic data released last week and this week show that price pressures in the US are cooling significantly,” he added.

The market analyst of xs noted that expectations that the US Federal Reserve will shift toward a more dovish stance are rising rapidly, with the FedWatch tool showing that the probability of a 25-basis-point cut is above 80 per cent.

“However, in December, the market will continue to receive new economic data before the rate decision takes place. One important point to note is that gold does not necessarily need the Fed to actually cut rates; merely the expectation that the Fed will become more dovish is enough to provide short-term momentum for the metal. The two strong gains in gold recently are clear evidence: gold reacted immediately when labour data and producer inflation came in the right direction, even though policy has not yet changed,” said Tran.

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