By: Economy Middle East

Gold prices edged higher on Monday as the escalating conflict in the Middle East drove Brent crude above $90 per barrel, fueling concerns that higher energy costs could reignite inflation. The rise came despite signals from several U.S. Federal Reserve officials that additional interest rate hikes may be required to keep price pressures under control.

As of 4:31 GMT, spot gold rose 0.17 percent to $4,024.61, while U.S. gold futures for August delivery fell 1.73 percent to $4,028.67.

In the UAE, gold rates edged slightly higher, with 24-carat gold gaining AED0.25 to AED484.5 and 22-carat gold rising AED0.5 to AED448.75.

In addition, 21-carat gold and 18-carat gold rose AED0.25 to AED430.25 and AED368.75, respectively.

Meanwhile, 14-carat gold rose AED0.25 to AED287.75.

Mideast tensions continue to pressure gold

Gold prices remained under pressure as geopolitical tensions in the Middle East intensified, with the U.S. carrying out a ninth consecutive night of strikes against Iran after confirming that at least two American military personnel were killed in Jordan.

Meanwhile, U.S. allies in the region reported fresh Iranian attacks on Sunday. The escalation sent Brent crude prices up 3 percent, pushing the global benchmark above $90 a barrel as disruptions to energy shipments through the Strait of Hormuz deepened.

The surge in oil prices has heightened concerns that inflation could remain elevated, reinforcing expectations that interest rates will stay higher for longer. Although gold is traditionally viewed as a hedge against inflation, rising interest rates reduce the appeal of the non-yielding metal.

Fed rate hike bets rise as oil prices surge

Recent U.S. inflation and labor market indicators have signaled a cooling economy, but investors remain cautious that a renewed surge in energy prices could undermine the Federal Reserve’s efforts to bring inflation back under control.

Adding to the pressure on gold prices, Cleveland Federal Reserve President Beth Hammack joined a growing number of policymakers suggesting that further rate hikes may be necessary to curb persistent inflation.

Markets have responded by increasing expectations for tighter monetary policy, with traders now pricing in an 82 percent probability of a December rate hike, up from 73 percent a week earlier, according to the CME FedWatch Tool.

Other precious metals

Elsewhere in the precious metals market, spot silver tracked gold prices higher, climbing 1.9 percent to $56.95 per ounce, while platinum advanced 0.5 percent to $1,599.97. Palladium, meanwhile, edged down 0.2 percent to $1,244.50 per ounce.