Gold prices experienced a modest rise on Tuesday as traders anticipated upcoming U.S. economic data for clues on the Federal Reserve’s approach to interest rates in 2025. The benchmark 10-year Treasury yield, which climbed to its highest level since May 2024 at 4.313%, continues to influence bullion’s performance.
Gold Prices in the UAE
In the UAE, gold rates saw incremental increases. The price of 24-carat gold rose by AED0.75 to AED319.50, while 22-carat gold moved up AED0.5 to AED295.75. Similarly, 21-carat gold increased by AED0.5 to AED286.25, and 18-carat gold edged higher by AED0.25 to AED245.25.
Global Market Movement
On the international stage, spot gold climbed 0.27% to $2,645.48 per ounce as of 6:10 GMT. U.S. gold futures also saw an increase of 0.29%, reaching $2,655.09. The U.S. dollar index dipped by 0.08% to 108.17, enhancing gold’s appeal for non-dollar currency holders.
Focus on U.S. Job Openings Data
Gold prices have recently stabilized around the $2,600 level, buoyed by a weaker U.S. dollar. However, elevated Treasury yields could still weigh on bullion’s upward trajectory. The benchmark 10-year yield hit its highest point in months following speculation about President-elect Donald Trump’s potential tariff strategies once he assumes office on January 20.
All eyes are now on the U.S. job openings report, set to release later today, along with ADP employment data and the Federal Reserve’s December meeting minutes scheduled for Wednesday. Investors are also gearing up for Friday’s non-farm payrolls data, which may further clarify the Fed’s policy direction. A stable unemployment rate of 4.2% could validate a gradual easing cycle, supporting gold’s current pricing.
Federal Reserve Rate Cut Outlook
The Federal Reserve’s December projections indicate a cautious approach to rate cuts in 2025, as policymakers remain wary of persistent inflation. San Francisco Fed President Mary Daly recently acknowledged progress in reducing price pressures but noted that inflation still exceeds the 2% target. Similarly, Fed Governor Lisa Cook emphasized the need for caution, citing strong labor markets and sticky inflation.
While gold is often seen as a hedge against inflation, its appeal diminishes in a high-interest-rate environment due to the lack of yields.
Impact of Trump’s Proposed Tariffs
President-elect Donald Trump’s proposed tariffs and protectionist policies could accelerate inflation and disrupt global trade, providing additional support for gold as a safe-haven asset. However, these policies might also encourage the Fed to tread carefully with rate cuts, potentially capping gold’s upside. After three rate cuts in 2024—one being a significant 50-basis-point reduction—the Fed has forecasted only two rate cuts in 2025 due to ongoing inflationary pressures.
Geopolitical Influences
Geopolitical tensions, which were a significant driver of gold’s surge in 2024, are expected to remain influential in 2025. Prolonged conflicts, such as the Russia-Ukraine war and unrest in the Middle East, continue to draw investors toward gold as a safe-haven asset.
Performance of Other Precious Metals
Gold’s upward momentum also positively impacted other precious metals. Spot silver increased by 0.71% to $30.16 per ounce, platinum rose by 0.63% to $939.05, and palladium climbed by 0.42% to $924.42.
