Nigeria gold holds steady at N178K/g despite strong naira

Nigeria's gold prices are remaining steady at N178,000 per gram, despite the country's currency strengthening and the US Federal Reserve taking a more cautious stance. Gold dealers in major Nigerian markets, such as Lagos, Kano, and Abuja, generally charge a 5%–10% premium over the spot rate for domestic sales. A strengthening Nigerian naira makes it cheaper for buyers to purchase gold priced in US dollars, which in turn keeps local prices stable.

Over the past 20 days, the 20-day simple moving average has hovered around 179,000/g, and profit-taking is preventing prices from soaring higher. Technical indicators, such as the Relative Strength Index (RSI) at 14 days, are showing a neutral position (48-52), suggesting a balance between the upward movement of international gold prices and the strengthening Nigerian currency.

Retail demand remains robust around the N175,000/g to N177,000/g support level, driven by jewelry purchases and private asset protection strategies. A sustained closure above N182,000/g could indicate a return to the previous bullish trend, accompanied by potential gains from currency weakness or a sharp rise in spot gold prices.

To strengthen Nigeria's foreign reserves and mitigate exchange rate risks, the Nigerian Federal Ministry of Solid Minerals and the Central Bank of Nigeria (CBN) have continued their efforts to purchase locally mined and refined gold bullion. The CBN's National Gold Purchase Program (NGPP) buys domestic refined gold in naira to maintain a floor on the domestic gold price and reduce foreign exchange exposure. This program offers a structural support price for Naira-denominated gold.

However, current interest rate hikes by the US Treasury and fluctuations in the US Dollar have limited the potential for significant price increases in the near future. In this environment, consolidated trading occurs within a range, and gold's status as a yield-less asset suggests that a pause in rate hikes is generally beneficial.

Inflation concerns, particularly from energy-driven inflation and potential threats to gold's appeal, have been less impactful due to a cooling US job market and a lower risk of a more aggressive Federal Reserve hike. Spot gold has shown support above important psychological levels due to the easing of inflation expectations and a cooling US job market.

As global gold markets tighten around LBMA-compliant standards, stronger export pipelines and increased market liquidity are expected.