Gold prices declined on Thursday after the Federal Reserve decided to keep interest rates steady and projected a half percentage point cut this year. Aside from today’s dip, rising tensions in the Middle East have recently buoyed demand for the safe-haven asset.
In Dubai, gold rates ticked down, with 24-carat gold declining AED2 to AED406.75 and 22-carat gold falling AED2 to AED376.5. Additionally, 21-carat gold declined AED1.75 to 361, while 18-carat gold edged down AED1.5 to AED309.5.
Globally, spot gold fell 0.50 percent to $3,373.1 at 4:29 GMT. Meanwhile, U.S. gold futures declined 0.50 percent to $3,391.06.
The U.S. dollar index gained 0.07 percent to 98.98, making gold prices more expensive for holders of other currencies.
Middle East political developments in focus
Gold prices have recorded notable gains in the past weeks as tensions in the Middle East resurfaced. The market now awaits a decision by the U.S. on its involvement in the conflict. If the U.S. decides to get directly involved in the conflict, geopolitical stakes will rise, further supporting gold prices.
Geopolitical tensions remained heightened as U.S. President Donald Trump on Wednesday refrained from confirming whether the U.S. would join the Israel-Iran conflict. Gold is often used as a safe haven for storing value during times of geopolitical and financial uncertainty.
“Gold, which back in April hit a record high at $3,500, has moved into a consolidation phase while awaiting the next potential bullish trigger. Despite the current lull, bullion continues to attract strong demand from central banks and long-term investors concerned about sovereign debt, inflation risks and the weakening U.S. dollar,” said Ole Hansen, head of commodity strategy, Saxo Bank.
Fed holds interest rates steady
On the economic front, gold prices fell as the Federal Reserve held interest rates steady on Wednesday. Fed policymakers still expect to cut rates by half a percentage point this year, but they slowed the pace of future cuts. However, Fed Chair Jerome Powell cautioned against putting too much weight on this outlook, warning of “meaningful” inflation ahead as higher import tariffs loom.
“This pause reflects the Fed’s ongoing ‘wait and see’ approach amid a complex economic backdrop characterized by persistent inflationary pressures, resilient labor market data, and heightened geopolitical and trade uncertainties. While the U.S. economy continues to grow at a solid pace, the central bank remains cautious, seeking clearer signs that inflation is sustainably moving toward its 2 percent target before initiating any rate cuts. Market pricing currently suggests the first potential rate cut may not materialize until October, with only modest easing expected by year-end,” added Hamza Dweik, head of trading at Saxo Bank MENA.
Growing concerns around U.S. fiscal sustainability, softening labor market data, and the threat of tariff-driven supply disruptions are reinforcing the case for hard assets like gold. These conditions also strengthen the possibility of a more dovish shift from the Federal Reserve, potentially opening the door to rate cuts sooner and deeper than previously expected. In this environment, gold prices pushing toward the $4,000 mark over the next 12 months is no longer out of the question, added Saxo Bank.
Read: Dubai 24-carat gold price today holds steady above AED407 amid rising Middle East tensions
Other precious metals
As gold prices declined, the precious metals market rose on Thursday. Spot silver gained 0.04 percent to $36.75, platinum rose 1.55 percent to $1,342.78 and palladium was up 0.98 percent to $1,058.8.
