Dubai gold prices stay low sweetening the deal for shoppers

Dubai's gold prices remained relatively low, offering an attractive deal for shoppers as traders awaited the Federal Reserve's decision on interest rates. The precious metal barely changed after losing 0.5% in the previous session and hovered around $4,000 an ounce. In the UAE, shoppers were flocking to the gold souks, as prices aligned well with the lower rates leading up to the festive weeks. 24-karat gold was priced at Dh483.25, 22-karat at Dh447.50, 18-karat at Dh367.75, and 14-karat at Dh287.

However, gold continued to face pressure due to stubbornly high energy prices, which kept inflation concerns alive. The metal also suffered from the broader unwinding of the AI trade, with investors selling to cover losses when tech stocks declined. On Friday, gold reached its lowest level since mid-July. The Federal Reserve's rate path expectations shifted over the past month, casting doubt on the near-term outlook for gold.

In the past month, market sentiment regarding a possible rate increase this week had moved significantly. Initially, traders had raised bets on an October hike following hotter-than-expected inflation data. However, central bank officials' comments later dampened these expectations. Now, analysts see a mere 10% chance of a rate increase during the week.

High energy prices continued to fuel bets on a rate hike before the year's end, which is crucial for gold as higher borrowing costs negatively impact an asset that yields no interest.

Spot gold declined by 0.2% to $4,007.66 an ounce as of 09:45 am in Dubai. Silver dropped 2.04% to $53.16 an ounce, while platinum and palladium remained relatively stable. The Bloomberg Dollar Spot Index, which tracks the US currency, experienced a slight increase. Dubai's gold prices dropped sharply after the weekend, with rates beginning at Dh300 per ounce.