Gold prices continued their upward trajectory, rising to a new all-time high on Monday amid rising safe-haven demand due to escalating geopolitical tensions in the Middle East and the Federal Reserve‘s latest interest rate cut.
In the UAE, gold prices gained AED1 with 24-carat gold inching up to AED318.50 and 22-carat gold rising to AED294.75. Meanwhile, 21-carat gold reached AED285.50 and 18-carat gold was at AED244.50.
Globally, spot gold rose 0.35 percent to $2,629.41Â as of 5:10 GMT, after hitting a record high of $2,631.09 earlier in the session. Gold prices have gained over 27 percent so far this year. Meanwhile, U.S. gold futures rose 0.25 percent to $2,652.70.
Middle East geopolitical tensions boost bullion
Several factors have propelled gold prices to a new record high including declining interest rates globally, rising geopolitical tensions in the Middle East, and the upcoming U.S. election.
The Fed started its easing cycle with a 50-basis-point rate cut last week and forecasted another half-point cut by year-end and a full point next year. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold. In addition, greater geopolitical and economic uncertainty raises its status as a safe asset.
This week, traders will await comments from several Fed officials including chair Jerome Powell and U.S. PCE inflation data due on Friday, for further insight into the policy easing cycle.
In addition, central bank meetings in Switzerland and Sweden will likely end in interest rate cuts this week amid the start of easing cycles globally following the Fed’s decision.
Read: Arab stock exchanges’ market cap grows 0.52 percent to $4.268 trillion in August
Other precious metals
Amid the surge in gold prices to a new record high, the precious metals market witnessed a decline. Spot silver inched down 0.04 percent to $31.10 while platinum fell 0.60 percent to $969.25. In addition, palladium lost 0.87 percent to $1,058.58.
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