Gold prices moved slightly higher on Monday, buoyed by a weaker U.S. dollar and a shift towards safe-haven assets driven by concerns over a potential global trade war. Investors are also looking for additional indicators to assess the Federal Reserve’s stance on interest rates.
In the UAE, gold rates saw a slight increase today. The price of 24-carat gold rose by AED0.25 to reach AED350.75, while 22-carat gold held steady at AED326.25. Additionally, 21-carat gold climbed by AED0.25 to AED313, and 18-carat gold also edged up by AED0.25, now priced at AED268.25.
Spot gold saw an increase of 0.1 percent, reaching $2,914.42 an ounce as of 0052 GMT, while U.S. gold futures climbed 0.3 percent to $2,921.90. U.S. President Donald Trump refrained from forecasting whether the country could enter a recession amid stock market anxieties regarding his tariff strategies involving Mexico, Canada, and China linked to fentanyl.
Tariff uncertainty unnerves investors
The unpredictable nature of tariff announcements has caused unrest on Wall Street, as investors indicate that erratic actions by the Trump administration to alter levies on trading partners are generating confusion instead of relief. Last Tuesday, Trump enacted new 25 percent tariffs on imports from Mexico and Canada, alongside fresh duties on Chinese products. He later exempted numerous imports from Mexico and some from Canada from these tariffs for a month, which has added to market uncertainty and heightened concerns about U.S. inflation and economic growth.
Tariffs have emerged as a significant worry for investors, many of whom believe they could adversely impact economic growth while simultaneously being inflationary. Concerns regarding Trump’s tariff policies propelled safe-haven gold to a record high of $2,956.15 on February 24. Gold is viewed as a safeguard against political risks and inflation, but if rising price pressures compel the Fed to maintain elevated interest rates, gold may lose its attractiveness as a non-yielding asset.
Employment report signals mixed trends
The Labor Department’s employment report released on Friday indicated that nonfarm payrolls increased by 151,000 last month, following a downwardly revised rise of 125,000 in January. Employment in cyclical sectors, such as manufacturing, construction, and warehousing, continues to grow. However, the average weekly hours worked fell to 34.1, which could signal an impending slowdown and potential layoffs. Despite this, wages have consistently grown above 4 percent, contributing to persistent inflationary pressures. Gold prices are currently consolidating within the $30 range following the employment data release, while the U.S. dollar reached a support level of 103.50.
Read more: UAE gold prices up AED0.75, global rates gain amid Trump tariff uncertainty
Federal Reserve maintains cautious outlook
Federal Reserve Governor Adriana Kugler highlighted that hiring remains above the breakeven point, yet uncertainty continues to pose challenges for the economy. She noted that wages are not a primary driver of inflation. In light of current economic conditions, Fed Chair Jerome Powell expressed that the central bank is not in a hurry to reduce interest rates. He acknowledged that the journey towards 2 percent inflation could be uneven and that the Fed will refrain from overreacting to isolated data points.
Central banks increase gold purchases
In contrast, central banks persist in acquiring gold as a hedge against economic uncertainty. The People’s Bank of China (PBoC) augmented its gold reserves by 10 tonnes in the first two months of 2025. The largest purchaser was the National Bank of Poland, which acquired 29 tonnes of gold—its most substantial purchase since June 2019.
Investors are now looking ahead to the U.S. consumer price index data scheduled for release on Wednesday and the producer price index data on Thursday. Spot silver increased by 0.1 percent to $32.56 an ounce, platinum remained steady at $962.90, and palladium saw a slight decline of 0.2 percent to $946.30.
