Dubai: Gold prices have edged slightly higher on Monday as traders globally are loosening their bets on an interest rate hike by the US Federal Reserve later this month. The change in stance is fuelled by remarks by Chair Kevin Warsh.
Traders pared back expectations of a quarter-point rate increase to below 20% after the Fed chair’s remarks were read as favoring a pause at next week’s meeting. Gold tends to struggle when borrowing costs rise, since it pays no interest.
Get updated faster and for FREE: Download the Gulf News app now - simply click here.
In the UAE, gold prices have inched about Dh2-Dh3 per gram on Monday. 24-karat gold is trading at Dh504.25 per gram. 22-karat trades at Dh467 versus Dh464.75 in its previous session. 14-karat gold still hovers below the Dh300 mark at Dh299.25 in early Monday trade.
A hot US inflation reading last week lifted bets on Fed hikes and pushed the dollar higher, but Warsh’s remarks stalled that rally. Gold has also found support from a tech stock selloff, driven by worries over the AI investment boom, and from a bond rally that dragged yields lower.
The metal has stayed above the key $4,000 an ounce level since August. Its safe-haven appeal has acted as a floor since a war-driven slump took it into a bear market earlier this year. Investors have recently poured money into gold-backed ETFs, which have seen inflows for 13 straight weeks.
Even so, bullion has lost roughly 20% since the US-Iran conflict began in late February. Pressure on gold is likely to persist in the near term, with traders still seeing a strong chance of another rate hike before year-end.
Currently, Spot gold is edging higher by 0.42 per cent to $4,177.78 an ounce at 09:30 am. in Dubai, and silver climbed 1.31 per cent to $57.56. Platinum and palladium also rose. The Bloomberg Dollar Spot Index, which tracks the greenback, slipped 0.1 per cent after a 0.3 per cent drop last week.