The start of the week was marked by stable gold prices in Dubai, coinciding with the beginning of the Indian festival Navratri on Sunday. According to data from Dubai Jewellery Group, 24-karat gold was priced at 505.5 dirhams per gram on Monday. Meanwhile, 22-karat, 21-karat, and 18-karat gold traded at prices of 468, 448.75, and 384.75 dirhams per gram, respectively. The most affordable option, 14-karat gold, sold for 300 dirhams per gram on Monday morning.
The nine-day Navratri festival is considered an auspicious period for purchasing gold. During this holiday, many people buy gold jewelry, coins, and bars, viewing them as symbols of prosperity, wealth, and good luck. Retailers often note an increase in demand as families make festive purchases and investments.
Spot gold fell by 0.16 percent to $4188 per ounce, while silver dropped by 0.14 percent to $223.55 per ounce.
Simon-Peter Massabni, Head of Business Development at XS.com, noted that gold is entering a critical phase, trading around $4185 per ounce while attempting to regain the $4200 level. He added that one of the primary factors supporting gold is the weakening US dollar and falling Treasury yields, which could give the precious metal more room to recover. A weaker dollar makes gold cheaper for holders of other currencies, and lower yields reduce the opportunity cost of holding an asset that does not generate regular income. However, according to his forecasts, these favorable conditions will only persist if yields continue to decline. If the dollar regains strength and Treasury yields rise again, gold could quickly lose a significant part of its recent momentum.
According to Massabni, the most important factor determining gold's next move will be the US Consumer Price Index report expected this week. He emphasized that markets analyze inflation not as an isolated economic indicator, but as a key factor shaping expectations regarding the Federal Reserve's monetary policy. If inflation comes in below expectations, pressure for tighter monetary policy may ease, and yields could fall, creating a more favorable environment for gold growth. Conversely, if the data shows more persistent inflationary pressure, expectations for further interest rate hikes could resume, potentially pushing the dollar and yields higher and putting new pressure on the precious metal.
Massabni expects increased volatility before the report release, and the market's reaction to any inflation surprise is likely to be more significant than current fluctuations in gold prices.