Gold prices in the United Arab Emirates rose on Friday, according to FXStreet data. The price climbed to 585.22 AED per gram, up from 580.57 AED the day before. For a tola, the price increased to 6,825.95 AED from 6,771.68 AED. Gold prices in the UAE are adjusted daily to reflect international rates and converted to AED.

Gold As A Safe Haven Asset

Gold is considered a safe-haven asset because it has historically held value. Central banks, especially from emerging economies, hold large amounts of gold to diversify their reserves. In 2022, central banks bought 1,136 tonnes of gold, worth about $70 billion, making it the highest purchase ever recorded. Gold often moves in the opposite direction of the US Dollar and US Treasuries and is influenced by economic and geopolitical events. Gold prices are impacted by interest rates and the strength of the US Dollar, as it is usually priced in dollars. A strong Dollar can lower gold prices, while a weaker Dollar tends to push prices higher. With gold’s continued strength, we see this as a good time to consider bullish positions in the derivatives market. The recent increase indicates growing momentum, making call options or bull call spreads appealing strategies in the coming weeks. This allows us to capitalize on potential gains while managing our risks.

Volatility And Strategic Responses

However, as gold prices hit record highs, market volatility has risen, which we can use to our advantage. The CBOE Gold Volatility Index (GVZ) is now over 20, a sharp rise compared to late 2025 averages. This high implied volatility makes strategies like cash-secured puts or covered calls useful for generating income. The strong growth in gold prices is supported by changing expectations for U.S. interest rates. Fed funds futures are now predicting at least two rate cuts by the end of the year, a major shift from the tight monetary policy seen last year. A weaker dollar, driven by lower rates, typically supports gold prices. We also see strong ongoing demand from institutional investors, providing a solid price floor. Official data shows that central banks have been aggressive buyers, adding over 1,000 tonnes of gold for the third year in a row. This trend of de-dollarization in emerging markets creates consistent demand that is likely to continue. Since prices are reaching new highs, we should prepare for possible pullbacks. Buying protective puts against long futures positions can be a smart way to safeguard against sudden declines. A sharp downturn in risk assets could lead to a spike in liquidity demand, temporarily impacting gold prices, as seen in brief moments in 2025. Create your live VT Markets account and start trading now.

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