Global gold prices climbed on Thursday, driven by heightened concerns over a potential escalation of conflict in the Middle East. Despite the pressure from the prospect of prolonged higher interest rates, geopolitical uncertainties have overshadowed these concerns, driving gold’s safe-haven allure.
In Dubai, gold prices declined where 24-carat gold dropped to AED287.75 per gram, while 22-carat gold reached AED266.25. Twenty-one-carat gold declined to AED257.75, while 18-carat gold reached AED221.
Globally, spot gold saw a 0.62 percent increase to $2,375.59 per ounce, as of 5:20 GMT. Meanwhile, U.S. gold futures increased by 0.10 percent to $2,375.59. This surge follows a recent record high of $2,431.29 per ounce that gold reached last Friday. The ongoing volatility in the Middle East has propelled investors toward gold, seeking stability amidst geopolitical turmoil.
Interest rate concerns
Despite the geopolitical catalysts driving gold prices, the Federal Reserve‘s stance on interest rates has introduced a counteracting pressure. With Fed Chair Jerome Powell signaling a potential prolongation of higher interest rates, concerns about gold prices declining have emerged.
Analysts stated that U.S. interest rates remaining higher for a longer may add pressure to gold’s recent surge. However, the precious metals market will start to see consolidation and potential pullback in the short term.
Market response to Fed’s position
Traders closely monitoring futures contracts tied to the Fed’s policy rate have adjusted their interest rate expectations accordingly. Currently, futures markets expect less than 50 basis points of rate cuts for 2024, with the first quarter point cut anticipated in September. European Central Bank officials echoed sentiments of cautious monetary policy adjustments, indicating that even after potential cuts, a tight monetary stance may persist.
Read: Oil prices stabilize after steep declines amid U.S. rate hike fears, Venezuela sanctions
Other precious metals
Beyond gold prices, other precious metals also experienced notable price movements in the market. Spot silver rose by 0.6 percent to $28.38 per ounce, while platinum remained steady at $938.40. Palladium witnessed a modest increase of 0.2 percent, reaching $1,027.82 per ounce.
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