Dubai gold prices consolidate as inflation spooks traders

Dubai gold prices have stabilized after a recent positive trend. On Monday, 24-karat gold opened at Dh 525, slightly lower than its previous close. Meanwhile, 22-karat gold was priced at Dh 486.00, Dh 2 cheaper compared to the previous day. Globally, gold prices fell by 0.5%, dropping below $4,360 per ounce after a modest weekly gain.

Traders are closely monitoring comments from Federal Reserve policymakers, who may discuss the possibility of another rate hike this year to combat inflation that has remained above the 2% target for over five years. Neel Kashkari, Minneapolis Fed President, stated that the inflation Americans are experiencing extends beyond oil prices and affects various aspects of the economy.

Brent crude oil prices, however, remained above $100 a barrel despite falling for four consecutive days. Traders are watching diplomatic efforts to end the US-Iran war. Meanwhile, the head of US Central Command reported that crude and liquefied natural gas flows through the Hormuz Strait have reached their highest levels in six months.

Gold-backed ETFs have seen inflows for eight consecutive days, even though their prices have weakened, indicating strong investor confidence. Chris Weston, Head of Research at Pepperstone, noted that traditional debasement trades are being questioned. While gold ETF inflows have been strong, it is possible that they will decrease throughout the week. The Federal Reserve's decision to raise interest rates last week has led the market to lean slightly towards another hike on October 28th.

As of 09:30 a.m. in Dubai, spot gold was trading at $4,355.83 an ounce, a 0.5% decrease. Silver added 0.2% to $66.22 an ounce, while platinum remained flat, and palladium showed an increase. The Bloomberg Dollar Spot Index, a measure of the US currency, remained unchanged after rising 1.1% last week.