Gold prices ease from April highs as inflation concerns and a stronger U.S. dollar put pressure on the market.
Dubai: Gold prices in Dubai edged lower on Monday morning, reflecting a cautious global market mood driven by rising geopolitical tensions and renewed inflation concerns.
At 9:19am, 24-karat gold was priced at Dh569 per gram, down from Dh572.25 on Sunday. The 22-karat variant slipped to Dh526.75 from Dh529.75 the previous day, reflecting a steady pullback after last week’s gains.
The latest move comes as investors reassess risk across markets following developments in the Strait of Hormuz, with global trends feeding directly into local bullion prices.
April trend shows uneven recovery
Price movements throughout April have been uneven, with gold trading in tight ranges before easing in recent sessions.
The month began with 24K gold at Dh573 per gram on April 1, before easing into the Dh563–Dh566 range over the following days. A brief rebound pushed prices to Dh577.25 on April 9, the month’s high, before they reversed again. Since then, prices have softened, with the current Dh569 level reflecting a gradual pullback from those peaks.
A similar trend was seen in 22K gold, which rose from Dh530.75 at the start of the month to a high of Dh534.50, before slipping back below Dh527 in recent sessions.
Overall, the pattern suggests a market attempting to stabilise but still reacting sharply to global developments.
Geopolitics drives cautious tone
Global markets opened the week on a defensive note after the US signalled plans to block the Strait of Hormuz, a key route for global energy supplies.
Michael Brown, Senior Research Strategist at Pepperstone, said markets are “trading in a rather ‘textbook’ risk-off fashion, as participants reach once more for the ‘conflict escalation’ playbook.”
He noted that President Trump’s response to the breakdown in talks appeared to escalate geopolitical tensions further, with announcements including a US Navy blockade of the Strait of Hormuz, threats to “interdict” vessels that have paid passage fees to Iran, and warnings of force against Iranian attacks on US ships.
Energy markets reacted immediately, with crude oil prices rising back above $100 a barrel, adding to already building inflation pressures across major economies.
Gold, which typically benefits from uncertainty, has instead faced short-term pressure due to a stronger US dollar and shifting expectations around interest rates.
Inflation and rates cap upside
Recent U.S. data showed inflation rising at its fastest monthly pace in nearly four years, largely driven by higher energy costs. This has reinforced expectations that central banks may keep interest rates higher for longer.
Higher borrowing costs typically weigh on gold, which does not yield interest, making it less attractive compared to interest-bearing assets.
Brown noted that policymakers are likely to remain cautious, with limited evidence so far of broader inflation spillovers. “The potential for second-round effects remains limited,” he said, pointing to relatively stable core inflation.
Meanwhile, a stronger U.S. dollar has added further pressure on global bullion prices, feeding into corresponding movements in Dubai’s local gold rates.
Liquidity and positioning in focus
Gold’s recent movements also reflect broader positioning across financial markets, as investors adjust exposure amid cross-asset volatility.
Bullion had already undergone a sharp correction since late February, at one point falling nearly 11% as investors sold holdings to cover losses in other assets. Although some recovery followed, current conditions suggest that liquidity dynamics continue to be a key driver of short-term price direction.
Despite this, the broader narrative remains intact, with gold continuing to be supported by underlying demand tied to economic uncertainty and geopolitical risks.
The recent dip offers a slightly more favourable entry point for buyers compared to last week’s highs, though price movements remain closely linked to global developments.
In the near term, direction will hinge on how geopolitical tensions unfold and whether inflationary pressures persist, both of which are likely to keep gold prices volatile in the days ahead.
