Gold prices continued to rise on Wednesday as investors awaited the release of key U.S. jobs data and comments from Federal Reserve Chair Jerome Powell for more insights into the U.S. interest rate cut outlook.
In the UAE, gold rates rose with 24-carat gold and 22-carat gold gaining AED1 to AED321.25 and AED297.5, respectively. Additionally, 21-carat gold and 18-carat gold went up AED0.75 to AED288 and AED246.75, respectively.
Globally, spot gold rose 0.20 percent to $2,650.47 per ounce, as of 6:09 GMT. In the last month, gold prices have lost close to 3.5 percent after hitting an all-time high of $2,790.15 in late October. Meanwhile, U.S. gold futures increased by 0.18 percent to $2,672.60.
The dollar index fell 0.03 percent to 106.33, making bullion more attractive for other currency holders.
Rate cut uncertainty
Gold prices have held steady around the $2,650 level as markets anticipated a slower U.S. rate cut cycle for 2025. The U.S. ADP employment report is due at 13:15 GMT while the U.S. payrolls report is due on Friday. Powell is scheduled to speak later in the day, likely marking the last public remarks before the Fed’s December meeting.
Despite the recent steady market activity, the long-term positive outlook for gold prices remains amid rising trade tensions and potential strain on U.S. budget deficits. U.S. central bankers this week signaled support for additional rate cuts. However, they remained concerned over inflation’s trajectory, particularly since President-elect Donald Trump’s re-election last month.
According to the CME FedWatch tool, traders are pricing a 73.8 percent chance of a 25-basis-point cut by the Fed this month, with 80 basis points of cuts by the end of 2025.
Data on Tuesday revealed that U.S. job openings increased moderately in October while layoffs declined. A strong jobs report may push the Fed to take a more cautious approach when cutting rates. The strong U.S. labor market report comes as progress in lowering inflation to the 2 percent target seems to have stalled, suggesting that the central bank may pause its rate-cutting cycle next year.
Trade tensions rise
Gold prices rose on Wednesday amid rising bets that the Federal Reserve will cut rates again this month. However, investors remain concerned that Trump’s tariff plans could trigger inflation and global trade wars, which could impact the safe-haven appeal of gold.
U.S. President-elect Donald Trump pledged to impose big tariffs against America’s three biggest trading partners, Mexico, Canada, and China and also threatened a 100 percent tariff on ‘BRICS’ nations.
Geopolitical tensions persist
On the geopolitical front, Russian drones struck critical infrastructure in Ukraine’s western Ternopil and Rivne regions overnight, the Ukrainian Air Force said. The attack left part of the city without electricity. This attack came only a week after Russian strikes cut power to most of the city and the surrounding region. In addition, tensions in the Middle East escalated as threats to the stability of the ceasefire deal between Israel and Lebanon emerged, further supporting gold prices.
Other precious metals
The precious metals market saw mixed movement on Wednesday as gold prices rose. Spot silver gained 0.05 percent to $31.04 while platinum fell 0.15 percent to $951.90 and palladium lost 0.43 percent to $967.75.
