By: Economy Middle east

Gold prices reached unprecedented levels in global markets on Wednesday, hitting just shy of the $4,200 per ounce mark, setting a fresh all-time high. This surge has been primarily driven by increasing expectations of further interest rate cuts by the U.S. Federal Reserve, coupled with escalating trade tensions between the United States and China, which have heightened safe-haven demand among investors.

On Wednesday, gold rates in Dubai saw a significant increase. The price of 24-carat gold rose by AED6.00, reaching AED503.50. Meanwhile, 22-carat gold climbed AED5.50 to AED466.25. Additionally, 21-carat gold saw an increase of AED5.25, bringing its price to AED447.00, while 18-carat gold gained AED4.75, now valued at AED383.25.

Globally, spot gold prices rose by 1.08 percent, reaching over $4,192 per troy ounce. Meanwhile, U.S. gold futures for December delivery increased by 1.11 percent to $4,209.81, compared to a previous close of $4,163.40.

Fed rate cuts boost gold appeal

The international spot gold price climbed notably on Wednesday, influenced by broad macroeconomic and geopolitical factors. As markets anticipate at least two more Fed rate cuts before the end of the year, the appeal of gold as an inflation hedge and safe store of value has intensified. Political and economic uncertainties, especially including the renewed U.S.-China trade frictions, have further bolstered bullion’s allure amid growing concerns about global economic growth prospects.

Gold’s performance reveals a remarkable trajectory this year, with prices jumping over 50 percent, a rally supported not only by the Fed’s dovish stance but also by persistent central bank purchases and higher holdings in exchange-traded funds (ETFs). The precious metal’s rise has been complemented by a weakening U.S. dollar, making it more attractive to holders of other currencies. 

The renewed U.S.-China tensions have compounded risks in the market. Recent announcements by the U.S. administration to impose new tariffs and export restrictions on Chinese technology imports have sparked fears of a prolonged trade conflict, disrupting global supply chains and adding to market volatility. These developments triggered a spillover effect into commodity markets, with gold benefiting as the foremost safe haven during times of geopolitical strife. Market analysts have noted that despite some easing conditions in geopolitical hotspots, these trade disputes have revived concerns, causing investors to flock to gold for security.

Bullish outlook for gold

Complementing gold’s rally, silver also surged to new heights, breaking its own records, driven by similar factors including safe-haven demand and tight market supply. Investment firms predict that silver could continue to gain momentum in the medium term, although price volatility remains a risk. 

Globally, this surge in gold prices is reflected in various currency markets. For example, in the United Arab Emirates, gold prices climbed significantly on October 15, closely tracking the international spot prices and reflecting strong local demand as well as exchange rate movements. In Indonesia, the domestic gold price soared alongside global increases, with one gram of Antam gold reaching over 2.2 million Indonesian Rupiah due to the upward international trend and favorable exchange rates.

Looking ahead, technical analysts continue to point towards a bullish outlook for gold. Market indicators suggest that while brief corrections or tests of support levels near $4,085 per ounce may occur, the overall momentum remains positive with targets potentially exceeding $4,295. However, a breakdown below critical support levels around $4,005 could signal a short-term reversal. 

Experts assert that gold’s role as a hedge against economic uncertainty and inflation remains crucial, especially with the Federal Reserve committed to a rate-cutting trajectory and unresolved global trade conflicts adding risk premiums to assets. The metal’s strong uptrend marks a significant milestone, positioning gold not just as a traditional store of value but also as a major strategic asset in portfolio management amid volatile global conditions.