United Arab Emirates United States

Gold prices in Dubai rose on Friday morning, with 24K gold reaching Dh503.0 per gram after gaining more than Dh2 in early trading. The increase came as global gold prices recovered, with spot gold quoted at $4,173 an ounce at 9.30am UAE time.

The local 24K rate was up from Dh500.75 per gram at the close of trading on Thursday. Other retail gold rates in Dubai stood at Dh466.9 per gram for 22K, Dh446.75 for 21K and Dh363.0 for 18K.

Carsten Menke, Head of Next Generation Research at Julius Baer, said a US inflation reading earlier this week that was higher than expected had renewed concerns that the US Federal Reserve could raise interest rates further. Those expectations put pressure on both gold and silver, he said.

Menke said the markets reacted negatively to the inflation data, particularly the higher headline figure, which includes energy prices. Gold fell by as much as 2% after the data was released, while silver declined by twice that amount, according to his assessment.

He said these movements were generally driven by short-term market sentiment and did not alter Julius Baer's view of the underlying outlook for the two metals. The bank sees limited near-term upside for gold and silver while the Federal Reserve remains focused on bringing inflation under control.

At the same time, Menke said downside risk should also be limited if the Fed raises rates less frequently than money markets currently expect. Over the longer term, he said concerns about US debt levels and the related interest burden should support gold.

Menke added that the gold-to-silver ratio had returned to a level Julius Baer considers reasonable, leading the bank to close its long position.