Gold prices rise as Fed rate hike bets cool
Dubai gold edges higher as traders scale back expectations of a US interest rate increase this month.
At a glance
- Traders cut rate hike expectations to below 20% after Fed Chair Kevin Warsh's remarks
- UAE gold prices rose Dh2-Dh3 per gram on Monday
- Gold supported by technology stock selloff and bond rally
- Gold-backed ETFs have seen inflows for 13 straight weeks
Gold prices gained on Monday as traders reduced bets on a US Federal Reserve rate hike later this month, following remarks by Fed Chair Kevin Warsh that were interpreted as favouring a pause. Expectations of a quarter-point rate increase fell below 20% following his comments. In the UAE, 24-karat gold traded at Dh504.25 per gram, with 22-karat at Dh467 per gram.
Gold typically weakens when borrowing costs rise, as the metal generates no interest. The price gains were also supported by a technology stock selloff driven by concerns over artificial intelligence investment, and a bond rally that lowered yields. Gold has remained above the key $4,000 per ounce level since August, with investors pouring money into gold-backed exchange-traded funds for 13 consecutive weeks.
Why it matters
Gold prices are sensitive to US monetary policy shifts, as higher interest rates reduce demand for the non-yielding asset. Fed decisions influence global financial markets and investor behaviour.
Original reporting
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