By: Economy Middle east

Gold prices surged on Tuesday, reaching a more than one-week high as renewed optimism about potential U.S. Federal Reserve interest rate cuts boosted the precious metal’s appeal.

In the UAE, gold rates rose on Tuesday, with 24-carat gold increasing by AED4.00 to reach AED499.00. Similarly, 22-carat gold saw a rise of AED3.50, bringing its price to AED462.00. Additionally, 21-carat gold climbed by AED3.50 to AED443.00, while 18-carat gold increased by AED3.00, reaching AED379.75.

Spot gold climbed 1.28 percent to $4,147.92 per ounce, marking the highest level since November 14 and continuing a strong rally that began Monday with a 1.8 percent advance. 

Additionally, U.S. gold futures for December delivery inched up by 0.33 percent to $4,183.95 per ounce. 

Shift toward monetary easing

The resurgence in gold prices was driven by remarks from Federal Reserve officials that hinted at the possibility of monetary easing in upcoming policy meetings, igniting fresh rate-cut bets among investors. This shift is seen as reducing the attractiveness of the U.S. dollar and Treasury yields, thereby enhancing gold’s status as a hedge against inflation and financial uncertainty.

The market’s focus on the Federal Reserve’s stance has been pivotal in shaping gold’s recent performance. After a phase of cautious tightening to combat inflation, Fed officials’ comments suggest a more dovish approach might be forthcoming due to slowing economic growth prospects. This potential pivot has encouraged investors to flock back to gold, traditionally a safe haven during periods of monetary easing and economic uncertainty. Gold’s price action over the past month has reflected this trend, with prices rising over 4 percent and reaching year-to-date highs after hitting an all-time peak of $4,381.58 in October 2025.

Technically, the gold market is exhibiting strong bullish momentum. Current trading at around $4,147 per ounce is supported by moving averages signaling short-term upward trends. 

Risk of downward pressure

Analysts observe a developing triangle pattern suggesting a corrective phase may precede further gains. The support level near $4,065 is seen as a key zone, from which gold is expected to rebound and continue climbing toward targets above $4,385 if positive momentum persists. Conversely, a break below $3,905 would negate the bullish scenario, potentially signaling a resumption of downward pressure with risks toward $3,815.

Geopolitical tensions have also contributed to gold’s upward trajectory. Persistent uncertainties in global markets, including conflicts and trade disruptions, continue to elevate gold’s appeal as a crisis hedge. Additionally, fluctuations in the U.S. dollar, particularly a softer greenback influenced by Fed rate-cut expectations, have augmented gold’s attractiveness. Currency movements remain a critical factor, especially in large gold-consuming regions such as India where exchange rate volatility directly impacts demand and price sensitivity.

Investor caution amid recession risks

In economic terms, gold’s resurgence comes amid mixed signals in financial markets. While U.S. inflation data and labor market reports suggest moderation, concerns over slower growth and potential recession risks have revived investor caution. This has kept precious metals on watchlists as investors seek safe assets. In India, the world’s second-largest consumer and importer of gold, domestic prices have also been affected by the rupee’s appreciation following interventions by the Reserve Bank of India to stabilize currency movements in response to global uncertainties, adding another layer of complexity to local gold price dynamics.

The gold futures market echoes the spot trends, with contracts reflecting robust trading volumes and investor interest. The December contract on the Multi Commodity Exchange (MCX) in India traded near INR123,913 per 10 grams, while silver, often moving in tandem as a precious metal hedge, saw positive gains with December contracts up amid similar sentiment. This concurrent strength in related metals reinforces the thematic outlook that rate cut expectations and geopolitical concerns will continue supporting precious metals in the near term.