U.S. inflation data exceeded expectations, yet a rate cut is still widely anticipated by investors
Gold prices saw minimal fluctuations on Monday as investors anticipated a widely expected rate cut by the Federal Reserve this week. Profit-taking, alongside a slight increase in the U.S. dollar, helped to restrain any significant gains.
In Dubai, gold rates have increased, with 24-carat gold priced at AED438.87 and 22-carat gold climbing to AED402.30. Additionally, 21-carat gold is now at AED384.01, while 18-carat gold has risen to AED329.15.
Globally, spot gold saw a modest rise of 0.03 percent, reaching $3,644.16 per ounce. The bullion climbed approximately 1.6 percent over the last week, peaking at a record high of $3,673.95 on Tuesday. Meanwhile, U.S. gold futures for December delivery dipped by 0.14 percent, settling at $3,681.42.
Inflation data exceeds expectations
The U.S. dollar index inched up by 0.1 percent, which made gold, priced in dollars, more expensive for international buyers. U.S. inflation data for August came in slightly above expectations; however, investors believe this will not prevent the Fed from implementing a quarter-percentage-point rate cut on Wednesday.
Non-yielding bullion, often viewed as a safe-haven asset amid broader market uncertainty, typically performs well in a low-interest rate environment. The Fed’s upcoming meeting occurs against a backdrop of challenges, including a legal dispute regarding its leadership and President Donald Trump’s attempts to exert greater influence over interest rate policy and the central bank’s wider role.
For gold, “while we see the risks to our $4,000/toz mid-2026 forecast as skewed to the upside, rising speculative length raises the risk of tactical pullbacks, as positioning tends to mean-revert,” Goldman Sachs stated in a note reported by Reuters on Friday. Speculators trimmed their net long positions by 2,445 contracts, bringing the total to 166,417 in the week ending September 9.
In other precious metals, spot silver climbed by 0.20 percent to $42.27 per ounce, platinum increased by 0.79 percent to $1,403.00, and palladium rose by 0.58 percent to $1,204.00.
Central banks boost reserves
Recent data from the World Gold Council’s Gold Demand Trends report for Q2 2025 indicates that global gold demand rose by 3 percent year-on-year, driven primarily by increased purchases in the jewelry sector and central bank acquisitions.
Central banks added 145.5 tons to their reserves in the first half of 2025, a 10 percent increase from the same period last year, reflecting continued diversification away from the U.S. dollar amid geopolitical tensions. The demand growth was particularly notable in Asia, with China’s gold imports rising by 15 percent and India’s retail investment up by nearly 12 percent, according to official statistics released by the Shanghai Gold Exchange and the India Bullion and Jewellers Association. This increased demand has lent underlying support to gold prices despite short-term fluctuations linked to monetary policy moves.
Gold as hedge against uncertainty
Additionally, reports from the International Monetary Fund (IMF) highlight that uncertainty surrounding global economic growth and inflation expectations has bolstered the role of gold as a portfolio hedge, reinforcing its status as a key safe-haven asset.
The IMF’s latest World Economic Outlook, published in July 2025, cites rising inflation volatility and trade disruptions as factors intensifying investor interest in precious metals.
Last week, UBS lifted its gold price outlook, expecting prices to reach $3,800 per ounce by the end of 2025, $300 higher than its prior estimate, and $3,900 by mid-2026, an increase of $200. The bank attributed the upward revision to expectations of Federal Reserve rate cuts, a weaker U.S. dollar and ongoing geopolitical tensions.
UBS also raised its projections for gold-backed exchange-traded fund holdings, expecting them to surpass 3,900 metric tons by late 2025, nearing the record high of 3,915 tons set in October 2020.
Source: economymiddleeast