Gold prices in the United Arab Emirates dropped on Friday to AED 467.39 per gram, down from AED 469.58 the day before. The price for a tola of gold also fell, now at AED 5,451.41, down from AED 5,477.08. The US Dollar reached its highest level since early August, leading some gold traders to take profits. Additionally, a ceasefire between Israel and Hamas has reduced gold’s appeal as a safe haven.

Federal Reserve Updates

The Chair of the Federal Reserve made no new announcements regarding policy, and the minutes from the September FOMC meeting highlighted ongoing concerns about inflation. There are expectations that the US central bank may cut borrowing costs two more times by the end of the year. The US government shutdown has now entered its second week with no movement on funding bills. Meanwhile, there are ongoing geopolitical tensions, including reported missile and drone attacks by Russia on Kyiv, causing power outages. Gold prices are still influenced by their negative correlation with the US Dollar and US Treasuries. Changes in these assets often affect how gold is priced. Central banks in emerging economies like China and India have been significantly increasing their gold reserves. We are witnessing a slight reduction in gold prices, likely a temporary response to a stronger US dollar and the news regarding the Israel-Hamas ceasefire. This dip may serve as a good entry point instead of signaling a new downward trend. The market is just taking a short pause after a strong upward movement.

Fundamental Case for Gold

The fundamentals supporting gold remain robust, especially with the US government shutdown creating uncertainty at home. During the shutdown of 2018-2019, gold prices rose over 4% amid the political turmoil. Current market expectations, reflected in the CME FedWatch Tool, indicate more than a 70% chance of another rate cut before the year ends, which would further help non-yielding assets like gold. Geopolitical tensions also provide strong support for gold prices, countering any optimism from peace talks in the Middle East. The escalating conflict in Ukraine, with large-scale attacks on Kyiv, ensures a continued demand for safe-haven assets. This is further supported by the latest World Gold Council data, showing that central banks added another 260 tonnes to their reserves in the third quarter of 2025, maintaining the strong buying trend from previous years. For those trading derivatives, this dip represents a chance to position for a return toward the $4,000 resistance level. Buying call options on gold futures or related ETFs can help take advantage of the anticipated price increase while managing risk. The current environment of mixed news is likely to keep volatility high, making options a practical choice for the coming weeks. Create your live VT Markets account and start trading now.

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