Gold prices today: Dubai rates dip as oil soars above $100

Dubai's gold prices dipped on Friday as oil prices surged above $100 a barrel, fueling inflation concerns and signaling the US Federal Reserve may maintain higher interest rates for an extended period. At 24K, gold fell to Dh522 per gram from Dh522.50, while 22K gold decreased to Dh483.50 from Dh483.75. The market was watching a weaker international gold price, with gold at $4,347.47 an ounce, down 0.42 percent.

Despite this decline, gold has now dropped for three consecutive weeks. Spot gold was down nearly 2 percent for the week, as markets grappled with higher energy prices, inflation risks, and expectations of US interest rate hikes. Dubai gold prices today: 24K slips as investors await US inflation data. Oil pressure is adding to gold's woes, with Brent crude trading near $108 a barrel and on track to surpass $100 for the first time since mid-May.

Higher oil prices can contribute to broader inflation by raising costs across various sectors, making it harder for central banks to lower rates or consider further increases. "Renewed price pressures, partly driven by elevated energy costs, reinforcing concerns that inflation could remain persistent," said Manav Modi, a commodity analyst at Motilal Oswal Financial Services.

Gold's next major test will be the latest US consumer inflation reading, expected later Friday. The US Producer Price Index rose 0.4 percent in August, following an upwardly revised 0.1 percent increase in July. This data has prompted traders to bet on higher US interest rates, putting additional pressure on gold. Higher bond yields can make the metal less appealing compared to interest-bearing assets.

Geopolitical tensions in the Middle East are providing some support for gold, despite inflation and interest-rate expectations weighing on prices. The Houthi takeover of Yemen's port city of Mocha and their advance along the Red Sea coast towards strategic islands have kept oil prices elevated, creating a challenging environment for markets.

Higher energy costs can increase inflation expectations, which could bolster gold as an inflation hedge, but they may also strengthen the case for higher interest rates—something negative for the metal.