By: Economy Middle east

Gold prices steadied on Monday, as a stronger U.S. dollar and reduced investor expectations for Federal Reserve rate cuts curtailed bullion demand. Spot gold hovered near $4,000 per ounce, a psychological barrier it recently struggled to maintain after reaching dizzying highs in October. This stabilization comes in the context of global economic and geopolitical developments influencing market sentiment.

In the UAE, gold rates inched up, with 24-carat gold gaining AED0.25 to AED482.50 and 22-carat gold rising AED0.25 to AED446.75. Meanwhile, 21-carat gold steadied AED428.25, and 18-carat gold gained AED0.25 to AED367.25.

Globally, spot gold was up 0.30 percent to $4,015.12. Gold prices have gained around 4 percent so far in October.

Meanwhile, U.S. gold futures for December delivery rose 0.72 percent to $4,025.62 per ounce.

Dollar index pressures gold prices

The Bloomberg Dollar Spot Index remained largely unchanged but strong, creating a headwind for gold, as a stronger dollar typically makes the metal pricier for holders of other currencies and reduces its appeal as a safe-haven asset.

In India, which is one of the world’s largest markets for physical gold, prices registered a slight dip, with local rates around INR1,22,990 per 10 grams. The recent rise in prices had raised gold above the INR1,23,000 mark in some cities earlier in the week. Experts there suggested the correction was a temporary phase following gold’s incredible rally, which pushed prices over 50 percent higher year-to-date, driven by sustained central bank buying and ongoing safe-haven demand amid global economic uncertainties.

China, another key player in the gold market, introduced a policy change by ending a longstanding tax rebate for certain retailers, a move expected to reduce physical gold demand. This policy shift has further contributed to the recent correction in prices, as reported by major financial information providers.

Silver prices also followed gold’s downward trend but remained relatively stable compared to their peak during the Dhanteras festive period in India. Silver traded around INR1,51,900 per kilogram, down from recent highs near 2 lakh per kilogram, signaling a partial retracement after the sharp rally. Globally, silver rose $0.52 to $48.93. 

Potential volatility

Looking ahead, analysts forecast potential volatility for gold in the near term with both upward and downward moves possible. Technical analysis suggests that while gold faces resistance near the $4,000 level, breaking below support near $3,905 could trigger further declines. Conversely, a sustained rebound could push prices above $4,165, confirming an ongoing uptrend. The metal’s trajectory remains closely tied to monetary policy expectations, particularly the Federal Reserve’s stance on interest rates, and broader investor risk sentiment.

The easing of U.S.-China trade tensions has also played a role in tempering gold demand, as improved trade relations typically reduce the need for hedging risk through bullion. However, geopolitical concerns and persistent macroeconomic uncertainties continue to support underlying gold demand.

Overall, November opened with gold steadying after a volatile October marked by sharp rallies and corrections. Investors remain cautious, balancing the metal’s near-term correction against its longer-term role as a store of value amid geopolitical and economic challenges. The coming weeks will likely see gold prices responding closely to developments in U.S. monetary policy and global economic data releases.