Gold prices remained volatile this week, driven by geopolitical tensions, U.S. election uncertainties, and expectations of a shift in global interest rates. While gold rates declined in the UAE, global markets saw the metal hover near all-time highs, reflecting increased demand for safe-haven assets.
UAE Gold Prices Fall Slightly
In the UAE, gold prices recorded a modest dip, with 24-carat gold declining by AED0.5 to AED331 per gram, while 22-carat gold reached AED306.50.
- 21-carat gold: AED296.75 (-AED0.25)
- 18-carat gold: AED254.50
Despite these slight declines, global dynamics have kept gold prices buoyant as investors respond to market risks.
Global Gold Prices Approach Record Levels
On the global stage, gold prices climbed by 0.46% to $2,733.95 per ounce on Tuesday, staying close to Monday’s record high of $2,740.37. U.S. gold futures also rose by 0.34% to $2,748.30. So far, gold has gained approximately 32% in 2024, reinforcing its appeal as a hedge against uncertainty.
Key Drivers Behind the Gold Rally
1. U.S. Election Uncertainty
Political uncertainty surrounding the upcoming U.S. presidential election on November 5 is driving demand for gold. Investors remain cautious as Donald Trump and Kamala Harris engage in a tight race, with recent polls showing both candidates neck-and-neck in key swing states. The uncertainty around the election outcome has heightened market volatility, prompting traders to turn to safe-haven assets like gold. Analysts expect prices to push above $2,800 as the election date nears.
2. Geopolitical Risks in the Middle East
The ongoing conflict in the Middle East is adding further fuel to gold’s rally. With little sign of resolution and the risk of a broader regional conflict, investors are increasingly seeking safety in gold. These geopolitical tensions have boosted gold’s appeal, counterbalancing the pressure from a stronger U.S. dollar and higher bond yields.
3. Interest Rate Expectations and Federal Reserve Policy
Market sentiment is also influenced by expectations of a 25-basis-point rate cut by the Federal Reserve in November, with an 87.7% probability assigned to the move. Lower interest rates typically make gold more attractive as it reduces the opportunity cost of holding non-yielding assets. However, the Fed’s cautious stance and slower pace of cuts are keeping the U.S. dollar and bond yields elevated, complicating market dynamics.
Impact of Bond Yields and the U.S. Dollar
Despite the 10-year U.S. Treasury yields climbing to a 12-week high, and the U.S. dollar remaining near a 2.5-month high, gold prices have defied expectations by continuing their rally. The tension between gold’s role as a safe-haven asset and the strength of the dollar has underscored the market’s complexity, with investors balancing multiple uncertainties.
Positive Movement in Other Precious Metals
Other precious metals have also seen gains amid gold’s momentum:
- Silver: +1.07%, trading at $34.12 per ounce
- Platinum: +0.57%, reaching $1,009.03
- Palladium: +1.39%, climbing to $1,065.71
Outlook: Gold Prices Poised for Further Gains?
With geopolitical tensions showing no signs of easing and the U.S. election adding more volatility, gold prices are expected to remain elevated. As central banks continue to accumulate gold and investors hedge against uncertainty, analysts forecast that prices could breach the $2,800 mark soon. The interplay between interest rate decisions, bond yields, and the U.S. dollar will remain crucial in shaping the next phase of the gold market.
