Dubai gold prices drop as US-Iran tension escalates

Gold prices eased slightly in Dubai on Wednesday morning as US-Iran tension fuels interest rate hike fears in the US.

The 24K gold price was trading at Dh528.0 per gram, while 22K, 21K, 18K and 14K opened at Dh489.0, Dh468.75, Dh401.75 and Dh313.5 per gram, respectively.

Spot gold was down 0.2 per cent at $4,384 an ounce. Silver was steady at $66.43 an ounce.

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On Tuesday, US and Iran exchanged escalating strikes in the Strait of Hormuz, as well as in US ally Jordan.

US forces hit multiple Iranian oil tankers last night, prompting Tehran to retaliate with attacks on 10 US ships this morning.

Iran also targeted a US base in Jordan, Reuters said. Jordan confirmed that there were no casualties from the attack.

The Islamic Republic said on Wednesday it would target oil tankers off US-allied Kuwait and Bahrain in retaliation for the strikes on its tankers.

Naeem Aslam, chief investment officer at Zaye Capital Markets, said geopolitical developments remain the more immediate source of support.

“President Trump said oil prices could fall sharply if the conflict with Iran is won, yet Brent crude remains near $99 per barrel as markets continue to price supply and shipping risks. Higher oil prices can feed directly into inflation expectations, while conflict uncertainty usually increases demand for defensive assets. Together, these factors strengthen the gold ecosystem even when bond yields are elevated,” he said.

Oil prices neared $100 a barrel on Wednesday morning after the US-Iran war escalation. Brent was trading at $99.02 a barrel on Wednesday morning.

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