Gold prices rose on Friday and were set for a weekly gain amid rising market anticipation of an interest rate cut by the Federal Reserve in September. With the rise of geopolitical tensions in the Middle East, markets are awaiting the release of U.S. nonfarm payrolls data for further insight into the upcoming rate cut.
In the UAE, gold prices rose AED2.75 with 24-carat gold rising to AED297.50 while 22-carat gold increased to AED275.50. Meanwhile, 21-carat gold reached AED266.50 and 18-carat gold reached AED228.50.
Globally, spot gold rose 0.53 percent to $2,459.28, as of 5:10 GMT, only $24.32 shy of its all-time high of $2483.60 on July 17. Meanwhile, U.S. gold futures gained 0.86 percent to $2,502.20.
Larger rate cut expectations
Gold prices rose as investors awaited the release of the U.S. payrolls report due at 1230 GMT for further cues on the monetary policy path. On Wednesday, Fed Chair Jerome Powell said that the next rate cut could occur as soon as September if the U.S. economy follows the central bank’s path.
Traders priced in a 28.5 percent chance, up from 11.8 percent last week, of a larger 50-basis-point rate cut in September, according to the CME Group’s FedWatch tool.
Geopolitical tensions
Analysts now expect gold prices to exceed $2,500 if geopolitical tensions in the Middle East escalate. In addition, a weaker jobs report will likely raise bets for a 50-basis-point rate cut in September. Gold is a hedge against geopolitical and economic risks and lower interest rates reduce the opportunity cost of holding non-yielding assets like bullion.
Concerns surrounding the U.S. elections and the rising tension in the Middle East are now significant support factors for gold prices.
Read: Oil prices head for fourth week of losses as demand worries outweigh supply risks
Other precious metals
The precious metals market saw mixed movement as gold prices rallied close to their weekly high. Spot silver rose 1.02 percent to $28.84 while platinum gained 0.92 percent to $967.54. However, palladium declined 0.05 percent to $904.64 while copper lost 0.39 percent to $4.05.
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