By: Economy Middle east

Gold prices climbed on Wednesday, reaching their highest levels in nearly two weeks. The rally was driven chiefly by reinforced market expectations of an interest rate cut by the U.S. Federal Reserve in December. This gold price surge reflects investors’ appetite for safe-haven assets amid economic signals pointing to a possible easing of monetary policy.

In the UAE, gold rates rose on Wednesday, with 24-carat gold increasing by AED1.75 to reach AED501.50. Similarly, 22-carat gold saw a rise of AED1.50, bringing its price to AED464.25. Additionally, 21-carat gold climbed by AED1.75 to AED445.25, while 18-carat gold increased by AED1.25, reaching AED381.50.

Dovish Fed signals

Globally, spot gold prices rose approximately 0.54 percent to around $4,164 per ounce, their highest since November 14. U.S. gold futures for December delivery also gained, rising about 0.83 percent to near $4,199 per ounce. This price action follows a sequence of weaker-than-expected economic data releases from the U.S., including soft retail sales growth which bolstered speculation that the Federal Reserve may reduce interest rates at its next policy meeting.

In recent weeks, Fed officials, including key figures like Federal Reserve Bank of New York President John Williams, have issued dovish comments moderating earlier hawkish stances. These remarks have pushed market probabilities for a 25 basis point rate cut in December to over 80 percent, according to the CME FedWatch tool. The prospect of a rate cut lowers the opportunity cost of holding non-yielding assets such as gold, enhancing bullion’s attractiveness as an investment in uncertain times.

Softer dollar fuels global demand for gold

In addition to U.S. monetary policy expectations, the decline of the U.S. dollar index below the psychological level of 100 has further supported gold prices. A softer dollar makes gold cheaper for holders of other currencies, contributing to demand increases globally. However, despite the upside momentum, analysts caution that geopolitical risks easing, such as reports of a roadmap toward peace between Ukraine and Russia, may cap further gains in gold prices for now.

Gold prices also saw rises in key markets such as India. 24-karat gold prices increased by about 0.42 percent, reaching INR126,060 per 10 grams. The Indian market remains a crucial driver of global gold demand, influenced by cultural and investment factors.

Looking ahead, market participants will closely watch upcoming U.S. economic data releases, including jobless claims and producer price index numbers, due later in the week. These reports will provide further clarity on the Fed’s policy direction and could influence gold’s trajectory in the coming weeks.