Dubai gold prices fall as Fed rate-hike bets rise

Dubai gold prices slipped on Monday, giving UAE shoppers relief after bullion came under pressure from rising expectations of a US interest-rate hike. The Dubai 24K gold rate fell to Dh533 per gram from Dh536.75, while 22K gold dropped to Dh493.75 from Dh497. The move comes as global gold markets digest a more hawkish outlook for US interest rates after Federal Reserve Chairman Kevin Warsh said policymakers still have "work to do" to bring inflation to the central bank's 2 per cent target. Gold has faced renewed pressure as traders increased bets on a US rate hike in September, with traders pricing in a 58 per cent chance, up from 36 per cent before Warsh's remarks. Expectations for a December increase also rose to 89 per cent. Gold does not generate interest or dividends, so when interest rates and bond yields rise, holding gold becomes relatively less attractive to investors. The US dollar has also strengthened, reaching a more than one-week high.