By: Economy Middle east

Gold prices surged to near a three-week peak on Tuesday, reflecting growing market optimism around an imminent U.S. Federal Reserve interest rate cut and signs pointing to an end to the U.S. government shutdown. The precious metal, known for its safe-haven status, extended recent gains amid an environment of economic uncertainty and shifts in risk appetite among investors.

Spot gold rose to around $4,132 per troy ounce, marking a rise of approximately 0.44 percent from the previous trading day and nearing levels last seen in late October, according to market trackers. This upswing follows several days of steady price appreciation driven by two main catalysts: the anticipation of Fed rate reductions and reduced risks from prolonged political deadlock in Washington. Meanwhile, U.S. gold futures for December increased by 0.34 percent, reaching $4,134.

In the UAE, gold rates also rose, with 24-carat gold gaining AED6.00 to AED499.25 and 22-carat gold rising AED5.75 to AED462.25. Additionally, 21-carat gold edged up AED5.5 to AED443.25, and 18-carat gold gained AED4.5 to AED379.75.

Fed’s anticipated interest rate cuts

The Federal Reserve is now widely expected to lower interest rates by 25 basis points during its December meeting, with the current probability estimated near 64 percent, based on market assessments like the CME Group’s FedWatch tool. Recent comments from Federal Reserve Governor Stephen Miran, who indicated that a 50-basis point cut may be warranted given easing inflation and rising unemployment figures, have reinforced this sentiment. Lower rates typically reduce the opportunity cost of holding non-yielding assets like gold, bolstering demand.

At the same time, confidence has been boosted by developments suggesting a resolution to the ongoing U.S. government shutdown, which has cast a shadow over the economy in recent weeks. Early November data reflected job losses especially in government and retail sectors, dampening consumer sentiment to a three-and-a-half-year low. Easing political uncertainty is allowing investors to refocus on economic fundamentals and speculative narratives driving gold higher.

Analysts note that gold’s performance is benefiting from the dual forces of central bank policy shifts and geopolitical developments. Experts highlight fthat the anticipated shutdown end significantly reduces uncertainty, facilitating market re-engagement with the rate-cut story and supporting further upside for gold into year-end. Gold’s path appears set to revisit and possibly surpass its late-October highs, with sustained upward momentum expected.

China’s ongoing demand fuels gold prices

Besides the Fed and government shutdown factors, other gold-supportive elements include persistent inflation concerns and ongoing demand from major buyers such as China. Notably, China’s central bank continues its streak of monthly gold reserve additions, contributing to strong physical demand. As the U.S. dollar remains relatively weak, gold prices benefit as an alternative store of value.

Silver and other precious metals followed gold’s upward trend, with spot silver up by around 0.76 percent to $50.72 per ounce. Meanwhile, commodities such as palladium also saw gains, reflecting broad-based appetite for metals amid easing economic worries.

Looking ahead, market analysts project gold prices may test resistance levels around $4,160 to $4,200 in the near term, driven by the convergence of Fed rate cut speculation, improved U.S. political outlook, and external demand factors. Some forecasts anticipate gold could surpass $4,200 if these catalysts persist. Conversely, any renewed economic or geopolitical disruptions could trigger corrections.