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In the UAE, the cost of 24-karat gold was at Dh225.5 per gram on Monday. Image Credit: Clint Egbert/Gulf News

Gold prices retreated on Monday from a one-month high scaled earlier in the session, as red-hot US inflation data tempered demand for safe-haven bullion.

In the UAE, the cost of 24-karat gold was at Dh225.5 per gram on Monday. Meanwhile, the price of 22-karat gold fell to Dh211.75 per gram, 21-karat to Dh202.25 and 18-karat to Dh173.25 in the UAE. Check the latest gold rates here.

Globally, spot price of gold was down 0.6 per cent at $1,859.90 per ounce. US gold futures, indicative of near-term prices, also eased 0.6 per cent to $1,864.40.

Gold, which is often seen as a safe-haven asset in times of economic crises, hit its highest since May 9 earlier in the session at $1,877.05 per ounce.

Analysts have been evaluating how gold could be heading for another rally, with warnings over a global economic slowdown paving the way for a fresh push toward $2,000 an ounce.

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Analysts have been evaluating how gold could be heading for another rally

Another rally ahead?

However, that's when soaring inflation data pushed the cost of the yellow metal lower. Will this downward price trend continue in the weeks to come? Analysts opine that it will.

Moreover, benchmark US 10-year government bond yields also rose to their highest since May 9, weighing on demand for zero-yield gold.

"The fact that gold disconnected itself from moving inversely to the US dollar suggests to me that markets are belatedly moving into a much more vigorous risk aversion mode (due to the inflation data)," OANDA senior analyst Jeffrey Halley said.

US consumer prices accelerated in May, suggesting that the country's central bank could continue with its 50-basis-point interest rate hikes through September to combat inflation. Such a trend is seen elsewhere worldwide as well.

"The data delivered an unsympathetic wakeup call to financial markets that inflation remains both entrenched and has real upside risks. Gold is benefiting from a swing to defensive haven positioning as equities and cryptos get hammered," Halley said.