Gold prices saw an increase on Friday and were set for their second consecutive weekly gain on rising safe-haven demand amid escalating tensions in the Middle East and rising hopes for an interest rate cut by the Federal Reserve later this year.
In the UAE, gold prices saw an AED2 increase with 24-carat gold rising to AED286.25 per gram, while 22-carat gold inched up to AED265. Twenty-one-carat gold rose to AED256.50 while 18-carat gold increased to AED220.
Globally, spot gold saw a 0.07 percent increase to $2,362.64 per ounce, as of 5:13 GMT. Meanwhile, U.S. gold futures gained 0.29 percent to $2,375.90.
Safe-haven demand amid rate cut bets
Rising geopolitical tensions in the Middle East in the last few days have driven safe-haven demand for gold, supporting its prices in the short term. In light of rising tensions, the market also expects the U.S. Federal Reserve to possibly cut interest rates in September, which will further support gold prices above the $2,300 level.
On Thursday, data revealed that first-time applications for U.S. unemployment benefits declined slightly last week while new housing construction declined. This new data, in addition to the softer retail sales in May, raised hopes for a rate cut in September.
Investors are closely watching for any hints on the timing of the next interest rate cut because lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.
Market focus now shifts to the U.S. flash purchasing managers’ indexes due at 01:45 GMT.
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Other precious metals
Despite the rise in gold prices, spot silver fell 0.28 percent to $30.62. However, platinum gained 0.39 percent to $981.95 while palladium rose 0.89 percent to $931.54.
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