Gold prices rose on Monday as the U.S. dollar weakened and uncertainty surrounding reaching a peace deal in Ukraine increased. Market concerns also grew regarding U.S. President Donald Trump’s tariff policy which further fuelled gold’s safe-haven demand.
In the UAE, gold rates inched up AED0.5 today, with 24-carat and 22-carat gold reaching AED345.5 and AED321.50, respectively. In addition, 21-carat gold and 18-carat gold rose by AED0.5 to AED308.25 and AED264.25, respectively.
As of 5:55 GMT, spot gold rose 0.10 percent to $2,862.38 per ounce, while U.S. gold futures increased by 0.78 percent to $2,870.8. This rise comes after gold prices lost around 3.1 percent last week, the steepest weekly fall since November.
The U.S. dollar index fell 0.33 percent from more than a two-week high it hit in the previous session, making bullion less expensive for other currency holders.
Geopolitical risks support bullion’s safe-haven demand
Gold prices remain supported by geopolitical risk factors due to the delay in the expected peace deal between Ukraine and Russia. Ukrainian President Volodymyr Zelenskiy’s meeting with U.S. President Donald Trump ended on a negative note on Friday, further adding uncertainty to financial markets already impacted by weaker economic data and uncertainty surrounding U.S. trade policies.
This comes on top of worries that Trump’s trade tariffs would undermine consumer spending and economic growth, further fuelling safe-haven demand for gold. U.S. Commerce Secretary Howard Lutnick said on Sunday that tariffs on Canada and Mexico would come into effect on Tuesday, but Trump would determine whether the tariffs will remain at the 25 percent level.
Trump also said that he would add another 10 percent tariff on Chinese goods on Tuesday, doubling the 10 percent duties imposed on February 4.
U.S. consumer spending unexpectedly falls
Data released on Friday showed that U.S. consumer spending unexpectedly fell in January. The U.S. Bureau of Economic Analysis reported that the Personal Consumption Expenditures (PCE) Price Index rose 0.3 percent in January and increased 2.5 percent over the past twelve months, down slightly from 2.6 percent in December.
The report also revealed that U.S. consumer spending unexpectedly dropped 0.2 percent last month, marking the first decline since March 2023 and the biggest decrease in nearly four years, fueling worries about the U.S. growth outlook.
According to the CME FedWatch tool, traders are pricing in the possibility that the Federal Reserve will resume cutting interest rates at the June policy meeting and lower borrowing costs again in September. Although bullion is considered a hedge against geopolitical uncertainty, it loses its appeal in a high interest-rate environment.
Read: UAE gold prices drop AED3.5, global rates fall ahead of PCE inflation data
Other precious metals
As gold prices rose, the precious metals market witnessed mixed movement. Spot silver gained 0.27 percent to $31.24 while platinum dipped 0.45 percent to $943.43. However, palladium rose 1 percent to $928.33 on Monday. Demand for industrial precious metals like platinum and palladium will likely fall if tariffs proposed by the Trump administration on U.S. auto imports dampen vehicle sales, analysts said.
