Gold prices have increased modestly on Monday as traders worldwide are reducing their positions on a potential interest rate hike by the US Federal Reserve later this month. The shift in position is driven by comments made by Chair Kevin Warsh. Traders reduced their expectations for a quarter-point rate increase to under 20% following the Fed chair’s comments, which were interpreted as supporting a pause at the upcoming meeting. Gold typically faces challenges when borrowing costs increase, as it does not yield any interest.

In the UAE, gold prices have increased by approximately Dh2 to Dh3 per gram on Monday. 24-karat gold is priced at Dh504.25 per gram. 22-karat is currently priced at Dh467, compared to Dh464.75 in the preceding session. 14-karat gold remains positioned just under the Dh300 threshold, trading at Dh299.25 in the early hours of Monday. A recent surge in US inflation data has heightened expectations for Federal Reserve interest rate increases, resulting in an appreciation of the dollar; however, comments from Warsh have tempered that upward momentum.

Gold has garnered support from a selloff in technology stocks, prompted by concerns regarding the AI investment surge, as well as from a bond rally that has resulted in lower yields. The metal has remained above the critical $4,000 an ounce threshold since August. Its safe-haven appeal has functioned as a support level since a war-induced decline propelled it into a bear market earlier this year. Investors have recently allocated substantial capital to gold-backed ETFs, which have experienced inflows for 13 consecutive weeks. Despite this, bullion has experienced a decline of approximately 20% since the onset of the US-Iran conflict in late February.

Pressure on gold is expected to continue in the short term, as traders maintain a significant likelihood of an additional rate hike before the end of the year. Currently, spot gold is edging higher by 0.42 percent to $4,177.78 an ounce at 09:30 AM. In Dubai, silver experienced an increase of 1.31 percent, reaching a price of $57.56. Platinum and palladium experienced an increase. The Bloomberg Dollar Spot Index, which tracks the greenback, experienced a decline of 0.1 percent following a 0.3 percent decrease in the previous week.