Gold prices in Nigeria fell to about N180,000, including retail markup fees, at the official exchange rate amid a stronger Nigerian currency and a hawkish US central bank.
Most gold vendors at the main Nigerian gold markets in Lagos, Kano, and Abuja would typically add a local premium of about 5% to 10% on top of the spot rate.
The gold price per gram was between N174,900 and N176,500, while the gold price per ounce was between N5,449,000 and N5,516,000 (with the global spot price roughly around $4,120 to $4,165). The USD/NGN spot exchange rate stood at approximately N1,320/$ to N1,331/$ in the Nigerian foreign exchange market.
In addition, a hawkish US Fed, characterised by higher-for-longer interest rates or monetary tightening, means a stronger US dollar and a negative impact on dollar-denominated global gold prices.
Currency movement is often the most volatile driver for Nigerian buyers. Whenever the naira fluctuates or weakens against the US dollar, local gold prices adjust upward independently of global shifts, since local gold is calculated as the global gold price multiplied by the USD/NGN exchange rate, making it a critical domestic hedge.
Local investors and savers turn to physical gold, including bars, coins, and jewellery, to protect their capital from the eroding purchasing power of the naira.
Last week’s US macroeconomic data releases indicated slowing inflation and a pause in the tightening of the US job market, taking pressure off the US Federal Reserve (Fed) to hike rates. Still, according to the CME Group’s FedWatch Tool, the probability of a hike in December is seen at around 85%.
Therefore, the minutes of the Federal Open Market Committee (FOMC) meeting on Wednesday will be closely watched as traders look for clues about further rate hikes and the policy parameters to which the USD and non-yielding gold are likely to react.
Fed hike bets moving out toward December as medium-term outlook dims
Strategists at BNY Markets emphasise that the repricing away from an October Fed move does not signal a significant change to the expected near-term policy path, as “that doesn’t mean that the December hike odds have shortened significantly, but we now expect the second hike of this cycle at the end of the year.”
- For the longer term, they warn that “into 2027, the outlook gets murkier, not least because the ongoing Middle East conflict has proven itself impossible to handicap – and with it, oil prices and the supply-side effect they have on the inflation outlook.”
However, the ever-present geopolitical jitters and a fresh boost in US bond yields are supportive of the safe-haven currency.
In the latest development regarding Middle East tensions, Saudi-backed Yemen’s internationally recognised government forces secured control over strategic locations along the Red Sea coast, including the Bab al-Mandeb Strait region, while Iran-backed Houthi forces struck key Saudi Arabian locations, including an Aramco refinery in Riyadh.
Also, Iran has increased the frequency of its assaults in the Strait of Hormuz this week, helping to support the rally in crude oil prices and build on the bounce from one-month lows seen overnight.
That stokes fears of energy-led inflationary pressures and keeps US bond yields underpinned at multi-year highs, providing further upside support for the USD and likely lending further support to XAU/USD bears.
On the other hand, China’s central bank increased its gold-buying run for the 23rd consecutive month, with little impact on the gold price amid a negative fundamental environment.
