Gold prices set a new record high on Tuesday as tensions in the Middle East escalated and bets for further rate cuts by the Federal Reserve pushed traders toward non-yielding assets.
In the UAE,ย gold rates gained AED0.5 with 24-carat gold inching up to AED319.50 and 22-carat gold rising to AED295.75. Meanwhile, 21-carat gold reached AED286.25 and 18-carat gold was at AED245.25.
Globally, spot gold rose 0.45 percent to $2,638.11 as of 5:30 GMT, after hitting a record high of $2,639.49 earlier in the session. Gold prices have gained over 37 percent in the past year. Meanwhile, U.S. gold futures rose 0.37 percent to $2,662.40.
Geopolitical tensions drive safe-haven demand
Rising tensions in the Middle East between Israel and Lebanon have driven safe-haven demand for gold, further supporting the surge in prices to an all-time high amid fears of a wider regional conflict.
Persistent geopolitical risks in the Middle East, U.S. political uncertainty ahead of the November election, and worries about an economic slowdown should keep supporting gold prices this year.
U.S. labor market risks raise easing bets
Market focus this week remains on Fed members’ comments and the release of the U.S. personal consumption expenditures (PCE) price index on Friday.
Rising bets for more aggressive easing by the Fed have also supported gold prices. According to the CME Fedwatch tool, traders are pricing in a 50.5 percent chance for another 50-basis-point cut during the Fed’s November meeting and a 49.5 percent chance for a smaller 25-basis-point cut.
Minneapolis Fed President Neel Kashkari noted on Monday that the balance of risks had shifted away from high inflation to a further weakening of the labor market, warranting a lower interest rate. Meanwhile, Chicago Fed President Austan Goolsbee said that the labor market deterioration traditionally occurs quickly and that keeping rates high does not ensure stability.
Read: UAE issues treasury bonds, Islamic sukuk worth $6.81 billion since 2022
Other precious metals
Amid the surge in gold prices to a new record high, the precious metals market witnessed positive movement. Spot silver rose 1.16 percent to $31.03 while platinum gained 1.31 percent to $968.85. In addition, palladium increased 1.14 percent to $1,053.41.
For more news on markets, clickย here.
