Gold prices in Dubai recorded a notable increase of Dh6 per gram after the US Federal Reserve raised interest rates. The latest move pushed local bullion prices higher, reflecting renewed changes in international markets and investor sentiment toward gold.
Dubai gold rates climb Dh6 per gram following the Fed’s interest-rate hike.
The UAE Central Bank increased its benchmark base rate by 25 basis points, taking it to 3.9 per cent. The adjustment came shortly after the US Federal Reserve announced its own rate hike on Wednesday evening.
Dubai Gold Prices Move Higher Following US Federal Reserve Rate Increase
Gold prices in Dubai opened higher on Thursday, with the precious metal gaining ground in the local market after the US Federal Reserve announced an interest-rate increase. The move by the US central bank marked its first rate hike in three years and immediately became a key factor influencing sentiment across financial markets.
At the opening of trading, the price of 24-karat gold in Dubai stood at Dh518 per gram. This represented an increase from Wednesday’s closing level of Dh512 per gram. The rise was also reflected across the other commonly traded gold categories in the UAE, indicating a broad-based increase in local prices.
The 22-karat variety was quoted at Dh479.50 per gram on Thursday morning, while 21-karat gold was trading at Dh459.75 per gram. Meanwhile, the price of 18-karat gold reached Dh394.25 per gram and 14-karat gold was priced at Dh307.50 per gram.
The movement in Dubai’s retail gold market came despite weakness in international bullion prices. Spot gold was changing hands at approximately $4,297.61 an ounce at 9.10am UAE time, representing a decline of 1.13 per cent. The global benchmark remained well below the record levels reached in August, when gold climbed as high as $4,692 an ounce.
Silver also faced selling pressure during Thursday morning trading. The metal was quoted at around $63.72 an ounce, down 1.12 per cent. The simultaneous weakness in gold and silver highlighted the immediate impact that the Federal Reserve’s monetary-policy decision had on precious-metal markets.
Federal Reserve Decision Shapes Market Sentiment
The Federal Reserve’s decision to increase interest rates was closely watched by investors because changes in US borrowing costs can have a significant influence on commodities such as gold. Higher interest rates can alter investor preferences between assets that generate income and assets such as gold, which does not pay interest.
The latest increase therefore prompted some investors to reduce their exposure to bullion around the policy announcement. Market participants had been positioning themselves cautiously ahead of the decision because the outcome of the meeting had the potential to trigger a sharp move in precious metals and other financial assets.
Despite the decline in international gold prices, the UAE market recorded higher opening rates across the different gold categories. Local gold prices can be influenced by international bullion prices, currency movements, market conditions and local demand, meaning that changes in global prices do not always translate immediately or proportionately into retail rates.
The UAE Central Bank also responded to the US decision by increasing its base rate by 25 basis points. Following the adjustment, the UAE’s base rate rose to 3.9 per cent.
The move reflects the close relationship between the UAE’s monetary policy and US interest-rate decisions. Because the UAE dirham is pegged to the US dollar, changes in US monetary policy can have important implications for the country’s interest-rate environment.
Investors Remain Cautious Around Rate Decisions
According to Vijay Valecha, chief investment officer at Century Financial, investors had significantly reduced their exposure to gold ahead of the Federal Reserve’s announcement.
The caution was linked to what Valecha described as the binary nature of the rate decision. Investors were faced with the possibility of a substantial market reaction depending on the direction and tone of the central bank’s announcement.
“Support lies at $4,273, followed by $4,200. A sell-on-rise approach toward channel resistance is favoured while the structure holds, though a decisive break above $4,509 would challenge the bearish setup, and a no-hike surprise would likely trigger that break immediately,” he noted.
Silver, on the other hand, is also rebounding off support near $62.00 within its own descending trendline from the early-September high. “Resistance sits at $65.49, then the trendline itself near $66.00–67.00. A similar sell-on-rise bias is favoured while price stays capped below these levels, with a break above $66.00 needed to shift the outlook, a scenario that would also become far more likely on a surprise Fed hold,” the analyst explained.
