Gold prices firmed up on Monday after reaching a historic milestone last week. The combination of geopolitical tensions, concerns about escalating tariffs that exacerbate trade frictions, and growing optimism regarding potential interest rate cuts from the U.S. Federal Reserve has continued to drive safe haven demand.
In the UAE, gold rates remained unchanged, with 24-carat gold at AED359.5, 22-carat at AED334.5, 21-carat at AED320.75, and 18-carat at AED275.
Spot gold increased by 0.1 percent to $2,986.53 an ounce as of 03:07 GMT. The bullion surpassed the $3,000/oz threshold, achieving a record high of $3,004.86 on Friday. Meanwhile, U.S. gold futures slipped by 0.2 percent to $2,994.60.
“The recent surge in gold prices, surpassing the $3,000 milestone for the first time, emphasizes gold’s enduring role as a safe-haven asset amid global economic and geopolitical uncertainties. This rally reflects heightened investor demand driven by concerns over trade tensions, inflationary pressures, and market volatility. Notably, central banks remain key players, continuing to increase their gold reserves as a means of ensuring stability and diversification. According to the World Gold Council’s Gold Return Attribution Model, US dollar weakness during the month was one of the primary drivers of gold’s performance, alongside an increase in geopolitical risk and a drop in interest rates,” Andrew Naylor, head of Middle East and Public Policy at the World Gold Council remarked to Economy Middle East.
“Over the past year, we have seen a significant rise in gold investments, including ETFs, as both institutional and retail investors seek protection against economic downturns and geopolitical risks. Just last month, gold ETFs saw massive net inflows of $9.4 billion, nearly 100t, the strongest monthly inflow since March 2022. This trend highlights the broad recognition of gold’s intrinsic value and its ability to preserve wealth in uncertain times. As global dynamics evolve, gold will continue to remain a reliable store of value,” Naylor added.
He further noted, “The Middle East is a significant player in the global gold market. Last year, the UAE became the second largest trading hub for gold based on import and export data. The region is the third largest gold consumer market after China and India, with over 266t of gold bought in 2024. However, 60 percent of gold demand in the region is for jewellery. Jewellery demand tends to be more price sensitive, and when the prices are high, consumers purchase lighter products. However, our data shows that the value of jewellery bought last year increased, despite lower volumes, reflecting gold’s long-term appeal as both an adornment and an investment.”
Consumer sentiment dips amid inflation concerns
U.S. consumer sentiment fell to a nearly two-and-a-half-year low in March, while inflation expectations surged amid fears that President Donald Trump’s extensive tariffs, which have sparked a trade war, would elevate prices and undermine the economy.
Geopolitical tensions persist
Geopolitical tensions remain a constant concern, as the U.S. has pledged to continue its military actions against Yemen’s Houthis until they cease their attacks on shipping. The Houthis announced on Sunday that they had launched an attack on the USS Harry S. Truman aircraft carrier and its accompanying vessels in the northern Red Sea, utilizing 18 ballistic and cruise missiles along with drones.
Trade war rattles financial markets
The intensifying trade war between the U.S. and several major trading partners has unsettled financial markets and raised apprehensions about its effects on global economies. On Thursday, U.S. President Donald Trump threatened to impose a 200 percent tariff on wine, cognac, and other alcoholic imports from Europe. This action was a response to the EU’s proposed tariffs on American whiskey and other products set for April, which followed Trump’s implementation of a 25 percent duty on steel and aluminum imports that took effect on Wednesday.
Read more: UAE gold prices climb AED1, global rates surpass $3,000 for the first time
Weaker dollar boosts gold prices
Additionally, the softer U.S. dollar, following disappointing economic data, has contributed to the upward movement in gold prices. The preliminary reading of the University of Michigan (UoM) Consumer Sentiment Index indicated that the index fell to its lowest level since November 2022, dropping to 57.9 from 64.7 in the previous reading. This figure was below the market consensus of 63.1.
Potential ceasefire could impact gold prices
However, any positive developments or reduced fears regarding the Russia-Ukraine conflict could result in a decline in gold prices. Last week, the United States and Ukraine proposed a 30-day ceasefire to Russia. Trump’s envoy, Steve Witkoff, mentioned on Sunday that he anticipated Trump would speak with Russian President Vladimir Putin this week, indicating that Putin “accepts the philosophy” of Trump’s ceasefire and peace terms.
Gold as a hedge against risks
Gold, often viewed as a safeguard against political risks and inflation, has appreciated approximately 14 percent so far in 2025. Markets are now looking ahead to the Federal Reserve’s monetary policy meeting on Wednesday, followed by remarks from Chair Jerome Powell.
