By: Economy Middle east

Gold prices extended their remarkable ascent on Wednesday, driven by ongoing market uncertainty and a growing sense among investors that the U.S. Federal Reserve is likely to lower interest rates this month, thereby boosting demand for the safe-haven metal.

In Dubai, gold rates saw an uptick compared to the previous day. The price of 24-carat gold increased by AED4.57, reaching AED425.23 per gram. Similarly, 22-carat gold rose by AED5.89 to AED383.90 per gram, while 21-carat gold recorded an increase of AED4.00, now priced at AED372.08 per gram. Additionally, 18-carat gold saw a rise of AED3.42, bringing its price to AED318.92 per gram.

Spot gold was up 0.25 percent at $3,537.01 per ounce, following an all-time high of $3,546.99 earlier in the session. U.S. gold futures for December delivery climbed 0.29 percent to $3,602.25.

Amid escalating uncertainty and potential trade tensions, U.S. President Donald Trump’s administration announced plans to seek an expedited ruling from the Supreme Court regarding tariffs that a U.S. appeals court deemed illegal last week. Trump has been exerting consistent pressure on the Federal Reserve to cut interest rates and has publicly entertained the idea of dismissing Fed Chair Jerome Powell.

Rate cut likelihood rises

In an escalation of this conflict, Trump attempted to remove Fed Governor Lisa Cook last month, igniting a pivotal legal challenge over the Fed’s capacity to operate without political interference. U.S. rate futures are indicating a 92 percent likelihood of a 25-basis-point rate cut by the Fed at the conclusion of its two-day policy meeting on September 17, according to CME Group’s FedWatch tool.

Non-yielding gold typically thrives in a low-interest-rate environment. The SPDR Gold Trust, the largest gold-backed exchange-traded fund in the world, reported a 1.32 percent increase in holdings to 990.56 tons on Tuesday, marking the highest level since August 2022.

Investors are now anticipating the U.S. non-farm payrolls data, set to be released on Friday, which will help gauge the potential magnitude of the Fed’s rate cut later this month.

In other market movements, spot silver dipped 0.2 percent to $40.82 per ounce after reaching its highest level since September 2011 in the previous session. Platinum gained 0.4 percent to $1,409, and palladium rose 0.7 percent to $1,142.77.

Global gold demand surges

The World Gold Council (WGC) reported that global gold demand in the second quarter of 2025 reached 963.7 tons, representing a 5 percent increase year-on-year, driven primarily by rising investment demand and central bank purchases. The WGC’s Gold Demand Trends report highlights that investment surged by 18 percent as geopolitical tensions and inflation concerns prompted investors to seek gold as a hedge. Notably, central banks added approximately 145 tons in Q2, maintaining their trend of being net buyers for 15 successive quarters. The report emphasizes that emerging market consumers, particularly in India and China, continue to contribute substantially to the demand for jewelry, which rose percent in volume terms compared to the previous year. 

Furthermore, analysis from the International Monetary Fund (IMF) in their September 2025 Global Financial Stability Report underscores that the ongoing volatility in equity markets combined with expected monetary easing by major central banks globally supports a bullish outlook for gold prices in the near term. The IMF notes that gold remains a key asset for diversification amid uncertain economic recovery trajectories, inflation risks, and geopolitical disruptions. The report stresses that central bank policies, especially in the U.S. and Europe, will be instrumental in shaping gold demand dynamics through 2026. 

Gold mine production declines

Additionally, according to the most recent data by the U.S. Geological Survey (USGS), gold mine production for the first half of 2025 declined slightly by 1.8 percent compared to the same period last year, reflecting disruptions related to supply chain constraints and regulatory challenges in major producing countries such as South Africa and Russia. This decline in supply amid rising demand presents further support for higher gold prices. 

In currency markets, the U.S. dollar index has weakened by approximately 2.3 percent since early August 2025, which generally supports gold prices given the inverse relationship between the dollar and gold.