Gold inched up on Monday, October 12, as declining oil prices alleviated concerns regarding inflation. Traders now perceive an increased likelihood that the US Federal Reserve will refrain from implementing additional interest rate hikes. Globally, bullion is trading slightly lower at $4,190.15 after it breached the $4,200 mark in early morning trade on Monday. In the UAE, prices have remained stable throughout the weekend. 24-karat gold remains above Dh500, currently at Dh505.50. The price for 22-karat gold stands at Dh468, while 18-karat is priced at Dh384.75. Additionally, 14-karat gold has edged closer to Dh300.

Oil serves as the primary catalyst. Brent crude has softened to approximately $103 per barrel (Dh378). Traders anticipate a reduction in supply and cost pressures following President Donald Trump’s announcement that Russia and Ukraine have reached an agreement on an energy ceasefire. However, both parties have not disclosed many details regarding the matter. The bond markets have played a role in supporting commodities as well. Yields on 30-year US Treasuries declined on Friday, providing a measure of relief. The US debt markets will be closed on Monday in observance of a holiday.

Buyers are also entering the market. Last week, there was an increase in the holdings of gold-backed exchange-traded funds. China’s central bank has accelerated its gold purchases. Nonetheless, gold continues to trade significantly lower than its previous highs. Since the onset of the US-Iran conflict in late February, it has experienced a decline of approximately 20% in its value. Disrupted energy supplies in the Middle East have sustained elevated inflation risks, prompting several central banks to increase interest rates in response. Elevated interest rates adversely impact gold, as it yields no interest income.

Investors are expected to seek more definitive indicators this week. US inflation data is scheduled for release on Wednesday, October 14. On Thursday, October 15, Fed Chair Kevin Warsh participates in a discussion at the International Monetary Fund’s annual meeting in Bangkok. Fed Governor Christopher Waller and Cleveland Fed President Beth Hammack are scheduled to deliver remarks. More importantly, all attention will be focused on the developments in the Middle East, as any further escalation of tensions between Saudi Arabia and the Houthis could lead to increased uncertainty.