In the UAE, gold prices paused their upward momentum on Wednesday morning, following a two-day rally and registering a slight decline at the market's opening.

Data from the Dubai Jewellery Group revealed that 24K gold was trading at Dh225.25 per gram on Wednesday morning, down from Dh225.5 on Tuesday. Meanwhile, 22K, 21K, and 18K gold were trading at Dh208.5, Dh201.75, and Dh173.0 per gram, respectively. As of 9:48 am UAE time, spot gold was at $1,859.24 per ounce, marking a 0.03 percent decrease.

These precious metal prices had reached a one-week high, partly due to the US dollar's decline, influenced by comments from several US Federal Reserve officials who suggested that the recent surge in Treasury yields might reduce the necessity for further rate hikes. The initial rally in gold earlier in the week was attributed to the Israel-Palestine conflict.

Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, noted that the upcoming release of the FOMC minutes would serve as a reminder to investors that "interest rates will remain higher for an extended period" if inflation remains above the target.

She explained, "Ahead of the data release, expectations are for a moderation in inflation, both in producer and consumer prices. Despite rising crude oil prices, US gasoline prices have been declining since mid-August due to a drop in refiner margins. This factor could potentially restrain spending in what is typically a strong September. However, the duration of falling gasoline prices remains uncertain."

Ozkardeskaya also highlighted that despite the dovish statements from the Fed, there is still a bias toward higher US yields, and inflows into US treasuries have increased as geopolitical tensions in the Middle East mount. The US 2-year yield remains 50 basis points above the upper end of the Fed's policy target range.