Gold maintained its losses as the intensifying conflict in the Middle East heightened concerns over potential new disruptions to energy supplies. This would consequently support inflation and render rate increases more probable. The metal traded near $4,160 an ounce, having concluded the previous session with a decline of 0.5%. Brent crude hovered around $106 a barrel. Washington is encountering increasing pressure to support its ally following the attack on Saudi Arabia’s primary airport by Iran-backed Houthis.

Gold has declined by approximately 20% since the onset of the US-Iran conflict in late February. The conflict has driven inflation upward globally and led central banks to adopt a more stringent policy stance. Increasing borrowing costs typically exert downward pressure on gold, as it does not yield any interest. In the UAE, the prices of gold have experienced a slight decline, with 24-karat gold trading at Dh502.75 compared to its opening price of Dh505 the previous day. 22-karat is priced at Dh465.50, whereas 18-karat is valued at Dh382.50. It is the lightweight, everyday use 14-karat that has once again dipped below the Dh300 threshold, currently trading at Dh298.25 this Tuesday.

Traders are closely monitoring Wednesday’s US inflation data for indications regarding the Federal Reserve’s subsequent actions, following a policy tightening that occurred a month prior. Swaps markets assign a probability of approximately 20% to the likelihood of an interest rate hike during this month’s meeting. They also incorporate one increase before the year concludes. Interestingly, speculative interest in gold appears to be diminishing. The COMEX net long decreased by 8%, reaching a three-month low of 115,000 contracts. Long-horizon investors continue to increase their positions via ETFs, resulting in total holdings reaching the highest level observed in four years.

“The contrast may suggest that ETF investors are increasingly looking beyond immediate monetary-policy headwinds from elevated bond yields and a stronger dollar, focusing instead on longer-term fiscal and debt sustainability concerns,” said Ole Hansen. Spot gold has increased marginally to $4192, reflecting a rise of 0.63 percent as of 10:00 am Dubai time. Silver has also experienced an increase, currently trading at $60.57, reflecting a rise of 0.54 percent. Platinum and palladium exhibited similar movements, whereas the Bloomberg Dollar Spot Index remained relatively stable, experiencing only a slight decrease.