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Overall gold price outlook is positive and any dip in the yellow metal price should be seen as good buying opportunity by investors, experts evaluate. Image Credit: Clint Egbert/Gulf News

Gold prices were little changed on Monday, as investors awaited the US central bank's meeting for clues on its interest rate hikes, while concerns over inflation and Russia-Ukraine discord kept bullion's safe-haven allure intact.

The price of 22-karat early Monday in the UAE is Dh222.5 a gram, as international bullion prices hovered at $1,840 an ounce. UAE resident shoppers have been delaying their purchases since the time the gold rate in Dubai was at Dh205-plus levels.

While gold has been stuck at well over $1,780 levels for the most part of the past two years, shoppers in the UAE have generally been resistant to spending when gold is in the $1,810 and over range.

Why are prices going even higher?

Gold investors are seeking cover from worries about a possible extension of US sanctions or new EU (European Union) measures if Russia attacks Ukraine, "but (gold and silver) face headwinds from US Federal Open Market Committee (FOMC) expectations," Phillip Futures analyst Avtar Sandu said in a note.

The Fed will tighten monetary policy at a much faster pace than thought a month ago to tame persistently high inflation, now viewed by economists polled by Reuters as the biggest threat to the US economy over the coming year. The US central bank's FOMC is scheduled to meet on January 25-26.

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Gold is generally seen as an inflationary hedge, but it is highly sensitive to rising US interest rates.

Gold can rise even more

Gold is generally seen as an inflationary hedge, but it is highly sensitive to rising US interest rates, which increases the opportunity cost of holding non-interest bearing bullion. Benchmark US 10-year government bond yields fell on Friday, reducing the opportunity cost of holding non-interest bearing gold.

Though, the precious bullion metal came down on Friday in both international and domestic markets, commodity experts are of the opinion that overall outlook for gold is bullish and any dip in gold price should be seen as big buying opportunity in near term.

Buy the next price dip?

According to commodity market experts, gold prices coming down on Friday in spot and domestic markets should be seen as profit-booking as the precious metal price rallied strongly last week. They said that overall gold price outlook is positive and any dip in the yellow metal price should be seen as good buying opportunity by investors.

Spot gold may retest at $1,850 per ounce, a break above which could lead to a gain to $1,860-$1,872 range, according to Reuters' technical analyst Wang Tao. Spot silver shed 0.3 per cent to $24.15 an ounce. Palladium rose 0.8 per cent to $2,124.21 and platinum was up 0.4 per cent to $1,032.80.

- With inputs from Reuters