UAE gold prices rise AED2.25, global rates steady as investors await Fed decision

Gold prices remained largely stable on Wednesday as investors awaited the Federal Reserve's decision on interest rates. Market focus was also on the trade policies of US President Donald Trump following new tariff threats.

In the UAE, gold prices recovered some of their losses from earlier in the week, with 24K gold rising by 2.25 dirhams to 334.5 dirhams and 22K gold increasing by 2 dirhams to 309.75 dirhams. Meanwhile, 21K and 18K gold rose by 1.75 dirhams to 299.75 dirhams and 257 dirhams, respectively.

Spot gold was slightly up by 0.02% at $2,760.78 per ounce by 6:08 GMT. Concurrently, US gold futures prices were stable at $2,794.55.

The dollar index fell by 0.08% to 107.78, making gold more attractive to investors holding other currencies. Gold prices had approached record highs last week, but fell by more than 1% on Monday as investors sold off gold to cover losses from a sharp tech stock correction. The tech stock plunge was triggered by the latest launch of low-cost, low-power AI models from DeepSeek.

Following Monday's market declines, a global market recovery impacted the demand for safe-haven assets, failing to help gold prices rise above Tuesday levels ahead of the Fed's decision on rate cuts.

The Fed's first policy meeting of the year is set to conclude later today. The market widely anticipates the Fed will hold rates steady, following 100 basis points of rate cuts between September and December last year. Gold traditionally acts as a safe-haven asset during times of economic uncertainty and trade wars. However, higher interest rates can dampen its appeal as it does not generate a yield.

Since the Fed’s December meeting, data suggests that the core view among Fed officials remains that inflation will continue to steadily move towards the 2% target, with low unemployment, and continued job and economic growth. If central bank officials hint at further rate cuts this year, Treasury yields could fall, potentially providing additional support for gold prices.

Markets are pricing in the possibility of two cuts to borrowing costs by the US central bank before the end of the year amid signs of inflationary pressures after Trump took office. Investors remain concerned about the potential economic impact of Trump's planned tariffs on imported computer chips, pharmaceuticals, aluminum, steel, and copper. This move, aimed at boosting production in the US, could trigger a new round of global trade wars and could continue to be a tailwind for gold prices.

A White House spokesperson told reporters on Tuesday that Trump still plans to impose tariffs on Canada and Mexico on Saturday. Investors will also be closely watching policymakers' reactions to Trump's calls for lower interest rates. However, Trump's policies are seen as inflationary, which could lead the Fed to maintain higher rates for longer.

Trump had previously proposed tariffs of up to 10% on global imports, 60% on Chinese goods, and increased import tariffs of 25% on products from Canada and Mexico. He has also vowed to impose tariffs on the EU and stated that his administration is discussing a 10% tariff on goods imported from China starting on February 1.

Additionally, markets in China, a major gold consumer, remain closed due to the Lunar New Year holiday.

While gold prices remained stable, the precious metals market saw a mixed picture on Wednesday. Spot silver rose by 0.04% to $30.40 per ounce, while platinum fell by 0.07% to $940.95 and palladium declined by 0.48% to $950.44.