Gold prices held near their record high on Thursday as safe-haven demand rose on fears that U.S. President Donald Trump’s tariff plans would accelerate inflation and trigger a global trade war.
In the UAE, gold rates recorded some losses, with 24-carat gold declining AED0.75 to AED354.25 and 22-carat gold losing AED0.5 to AED329.75. Additionally, 21-carat gold fell AED0.75 to AED316, while 18-carat gold lost AED0.5 to AED271.
Globally, spot gold gained 0.87 percent to $2,945.25 per ounce as of 6:22 GMT, trading near the all-time high of $2,946.85 it hit on Wednesday.
U.S. gold futures gained 0.95 percent to $2,963.92 as the U.S. dollar index declined by 0.18 percent to 106.98. A weaker dollar makes bullion more attractive for other currency holders.
Inflation concerns trigger gold rally
Trump’s tariff plans are triggering increased uncertainty surrounding the outlook of both global trade and inflation which is supporting gold prices near their record high. Analysts expect gold prices to surpass the $3,000 level if trade tensions escalate.
Since his inauguration, Trump has imposed a 10 percent tariff on Chinese imports and a 25 percent tariff on steel and aluminum. He said on Wednesday he would announce tariffs related to lumber, cars, semiconductors and pharmaceuticals “over the next month or sooner.”
Minutes of the Federal Reserve‘s last policy meeting showed on Wednesday that Trump’s initial policy proposals raised concerns about higher inflation and affirmed the need for a continued pause on rate cuts. Despite chances of fewer rate cuts this year, market participants maintained their overall bullish outlook for gold prices. Bullion is seen as a hedge against geopolitical risks and inflation, but higher interest rates dampen the non-yielding asset’s appeal.
“FOMC minutes showed that policymakers stressed caution in monetary policy due to high uncertainty. They considered maintaining restrictive rates if the economy remained strong and inflation high but noted easing could occur if the labor market weakened, economic activity slowed, or inflation quickly returned to 2 percent. They emphasized the need for more evidence of sustained disinflation,” said Saxo Bank in a recent report.
Potential Russia-Ukraine peace deal to impact safe-haven demand
Gold prices will likely remain supported by robust physical market demand and resilient central bank purchases. Goldman Sachs recently raised its gold price forecast to $3,100 per ounce from $2,890 per ounce for the end of 2025, citing structurally higher central bank demand.
UBS also updated its gold price forecast, projecting that the yellow metal could reach a high of over $3,200 before stabilizing at elevated levels in the coming years. This adjustment represents an increase from their previous peak prediction, with UBS highlighting several factors that contribute to a more optimistic outlook.
However, bullion could see a potential downside if a peace deal is reached between Russia and Ukraine.
High-ranking officials from the United States and Russia recently convened in Riyadh, Saudi Arabia, for initial discussions regarding the ongoing war in Ukraine. While these talks are still in the early stages, any advancements toward a peace agreement could potentially impact safe-haven demand and act as a headwind for gold prices.
A group of European leaders also agreed to meet in Paris on Monday to provide Ukraine with security guarantees. However, a European Union official warned that concluding a ceasefire without a peace agreement would be dangerous.
Read: Oil prices fall to $75.73 on reports of U.S. crude inventories rising
Other precious metals
As gold prices held near their all-time high, the precious metals market witnessed positive movement on Thursday. Spot silver gained 0.43 percent to $32.86, platinum rose 0.35 percent to $975.15 and palladium increased by 0.69 percent to $974.62.
