Dubai gold prices dip slightly as inflation fears grow

Dubai: Gold prices dipped slightly amid growing concerns over inflation, driven by the escalating Middle East conflict. The metal traded around $4,160 per ounce, up marginally from the previous session's decline of 0.5%. Brent crude hovered near $106 a barrel. Washington is under increasing pressure to support its ally following Iran-backed Houthis' attack on Saudi Arabia's main airport.

Gold has lost about 20% since the US-Iran war commenced in late February, exacerbating inflation globally and prompting central banks to tighten monetary policy. In the UAE, 24-karat gold settled at Dh502.75, 22-karat at Dh465.50, and 18-karat at Dh382.50. Even the more commonly used 14-karat gold fell below Dh300, trading at Dh298.25.

Market observers are scrutinizing Wednesday's US inflation data for clues on the Federal Reserve's next move, a month after its policy tightening. Swaps markets currently estimate a 20% probability of a rate hike during this month's meeting, with one increase expected before the end of the year. Notably, speculative interest in gold is waning, with the COMEX net long position dropping by 8% to a three-month low of 115,000 contracts.

Long-term investors continue to buy gold via ETFs, driving total holdings to the highest level in four years. Spot gold climbed to $4192, or 0.63% at 10:00 am Dubai time, while silver rose to $60.57, up 0.54%. Platinum and palladium also posted gains, while the Bloomberg Dollar Spot Index edged slightly lower. Dubai gold prices are stabilizing as traders weigh inflation fears and speculation about potential rate hikes.