STOCK Gold souq Dubai
Gold sees strong trade at the Gold Souk in Dubai. How are gold prices expected to perform in the next coming weeks? Image Credit: Stefan Lindeque/Gulf News

Gold prices dropped on Tuesday, as a higher dollar weighed on demand for greenback-priced bullion, which is set for a second straight monthly loss for the first time since March 2021.

In the UAE, the cost of 24-karat gold was at Dh225.25 per gram on Tuesday. Meanwhile, the price of 22-karat gold fell to Dh211.5 per gram, 21-karat to Dh201.75 and 18-karat to Dh173 in the UAE. Check the latest gold rates here.

Globally, the spot price of gold was down 0.5 per cent at $1,847.50 per ounce. US gold futures, indicative of near-term prices, were down 0.4 per cent at $1,850.40.

Gold prices are down about 2.6 per cent so far this month, their most since September. A measure of the value of the US dollar relative to a basket of foreign currencies, the dollar index rose, making bullion more expensive for buyers holding other currencies.

As the world's top central bank battles to bring down high inflation, the US Federal Reserve should be prepared to raise interest rates by a half percentage point at every meeting from now on until inflation is decisively curbed, Governor Christopher Waller said on Monday.

The reason being higher short-term US interest rates raise the opportunity cost of holding bullion, which is reflected in the cost of the yellow metal worldwide.