Gold prices in the United Arab Emirates went up on Tuesday. The price per gram rose to 456.47 AED, up from 452.63 AED on Monday. A tola, a traditional measurement for gold, increased to 5,324.12 AED, up from 5,279.38 AED the day before. This increase in gold prices happened as the US Dollar Index dropped by 0.27% to 97.91. US Treasury yields also fell, with the 10-year note down three basis points to 4.141%, and real yields dropping to 1.761%.

US Economic Indicators

In other news, US Pending Home Sales rose by 4% in August after a decline in July. The current US PCE Price Index meets predictions, hinting at a possible 25 basis point rate cut by the Federal Reserve in October. Central banks are large holders of gold, adding 1,136 tonnes worth $70 billion to their reserves in 2022. Nations like China, India, and Turkey are boosting their gold reserves. Geopolitical instability and low interest rates often push gold prices higher, mainly influenced by the US Dollar’s performance. The information provided is for informational purposes only and does not constitute investment advice. Gold prices are finding strong support as US Treasury yields gradually decrease from their recent highs. The 10-year yield is now around 3.85%, significantly lower than the peaks observed in 2023 and 2024. This situation reduces the cost of holding gold, making it a more attractive investment. Market attention is now on the Federal Reserve’s next steps, especially with recent inflation data showing a steady cooling trend. The CME FedWatch Tool shows a growing belief that the Fed might start cutting rates in the first half of 2026. This expectation is gently putting pressure on the US Dollar, benefiting gold prices.

Demand From Central Banks

Central banks’ strong demand continues to support gold prices. They bought a record 1,136 tonnes in 2022 and added another 1,037 tonnes in 2023. The trend of diversifying reserves away from the dollar is still strong, leading to steady demand that isn’t affected by investor sentiment. Global trade tensions and regional conflicts are also sustaining interest in gold as a safe haven. Although we haven’t seen a large rush to safety lately, ongoing uncertainty encourages investors to diversify into tangible assets. Gold’s protective role in times of geopolitical unrest is still very important. Given this backdrop, derivative traders are preparing for a potential price breakout in the upcoming months. Call options set to expire in early 2026 are gaining popularity as they directly relate to anticipated Fed rate cuts. Traders are also considering long-dated futures contracts to secure current prices before an expected rise. It’s essential to note how gold managed to stay resilient during the aggressive rate increases from 2022 to 2024. Despite challenges from rising yields, gold proved strong. This past performance suggests that it may react positively now that monetary policy might turn in its favor. Such historical strength should give traders confidence in the current market setup. Create your live VT Markets account and start trading now.

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