Gold prices in the United Arab Emirates rose on Friday, as reported by FXStreet. The price increased to AED 515.12 per gram from AED 511.04. The price per tola also went up to AED 6,008.22 from AED 5,960.70. Market events, such as US-China trade tensions and the US government shutdown, have driven up gold prices. The potential for interest rate cuts by the US Federal Reserve has weakened the US Dollar, making gold more attractive as a safe investment.

Gold Prices In The UAE

Gold prices in the UAE reflect global rates adjusted for local currency and measurement units. Gold is not tied to any specific government and serves as a protection against inflation and currency devaluation. It is particularly in demand during uncertain times. Central banks, which hold significant amounts of gold, aim to diversify their reserves to support national economies. In 2022, these banks, especially those in emerging markets, added a record 1,136 tonnes of gold. Gold prices typically rise when the US Dollar and US Treasuries drop. Economic fears and geopolitical instability can lead to higher gold prices due to its reputation as a safe asset. Low interest rates further encourage gold investments, while a stronger dollar generally keeps prices down. With rising gold prices, global economic risks, and expectations of interest rate cuts by the Federal Reserve, it seems like a good time for traders to explore strategies that benefit from potential price increases. Derivative traders could look into buying call options or setting up bull call spreads to take advantage of this upward trend with controlled risk.

Federal Reserves Dovish Stance

The Federal Reserve’s more relaxed approach is a key factor driving market trends. Markets are fully expecting interest rate cuts during the upcoming October and December meetings. Recent economic data backs this expectation, as the September Non-Farm Payrolls report revealed only 85,000 new jobs, indicating a slowing labor market. This gives the Fed strong reasons to loosen monetary policy, which usually weakens the dollar and supports gold prices. Geopolitical tensions add pressure to safe-haven assets like gold. The early conflict in Ukraine in 2022 showed how such events can lead investors to seek safer options, and recent Russian attacks have reignited those fears. US-China trade tensions also enhance uncertainty, further driving interest in gold. This situation is placing noticeable stress on the US Dollar, which tends to move inversely to gold. The US Dollar Index (DXY) has already dipped below 103 as traders anticipate the Fed’s easing cycle. For investors, this dollar weakness makes gold more affordable for foreign buyers, strengthening the case for gold investment. Additionally, strong demand from central banks plays a crucial role in this trend. Following record purchases in 2022 and 2023, the latest data from the World Gold Council indicates that global central banks have added over 800 tonnes to their reserves this year alone. This steady demand creates a solid support for gold prices, suggesting that any major drops are likely to be brief. Create your live VT Markets account and start trading now.

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