Gold prices rose on Tuesday as investors looked forward to the release of the upcoming U.S. economic data that could provide insights into the Federal Reserve‘s interest rate path.
In the UAE, gold rates rose marginally with 24-carat gold and 22-carat gold gaining AED0.25 to AED319.5 and AED295.75, respectively. Additionally, 21-carat gold rose AED0.5 to AED286.5 and 18-carat gold went up AED0.25 to AED245.5.
Globally, spot gold rose 0.42 percent to $2,645.66 per ounce, as of 6:15 GMT. Meanwhile, U.S. gold futures increased by 0.37 percent to $2,668.22.
Fed’s interest rate outlook
In 15 days, the U.S. central bank will meet to study the possibility of an interest rate cut. Traders are currently pricing a 74.5 percent chance that the Fed will cut rates by 25 basis points, according to the CME FedWatch tool. The market is also awaiting the release of key U.S. data this week including the job openings due later in the day, the ADP employment report on Wednesday, and the payrolls report on Friday.
Fed Governor Christopher Waller said on Monday that with inflation still forecast to fall to 2 percent, he is leaning towards supporting another rate cut later this month. The comments boosted expectations of a rate cut at the Fed’s December 17-18 meeting.
Meanwhile, New York Fed Bank President John Williams said that he expects the central bank to continue moving to a more neutral policy setting over time. Gold traditionally thrives in a low-interest-rate environment and during periods of geopolitical uncertainty.
U.S. dollar recovers
Despite the recovery of the U.S. dollar, gold prices remained on an upward trajectory amid rising bets that the Federal Reserve will cut rates again this month. However, investors remain concerned that U.S. President-elect Donald Trump’s tariff plans could trigger inflation global trade wars, which impacts the safe-haven appeal of gold.
The dollar index was up 0.07 percent to 106.52, reducing gold’s appeal among holders of other currencies.
Trump’s tariff threats significantly strengthened the dollar in the previous session, which in turn pressured gold prices. He announced the possibility of “100 percent tariffs” on the BRICS bloc, cautioning them against seeking alternatives to the dollar. This warning negatively impacted the currencies of these nations and elevated the dollar, as traders anticipated further protectionist measures from the incoming administration.
Last week, Trump also threatened additional tariffs on China, Canada, and Mexico, raising concerns about a potential global trade war. Mexican President Claudia Sheinbaum warned of retaliation if Trump enforces a 25 percent tariff, citing potential U.S. job losses and higher consumer prices.
Geopolitical tensions escalate
Russia fired at least 60 North Korean missiles against Ukraine. North Korean leader Kim Jong Un vowed that his country will support Moscow until it achieves victory in Ukraine. 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.
Read: Gold prices decline as Trump’s tariff threat bolsters dollar
Other precious metals
The precious metals market saw mixed movement on Tuesday as gold prices rose. Spot silver gained 0.40 percent to $30.63 while platinum fell 0.36 percent to $943.35. In addition, palladium lost 0.45 percent to $977.
