UAE gold prices gain AED1, global rates hover near record high on strong safe-haven demand

Gold prices edged lower on Thursday but remained near the record highs reached in the previous trading session. Escalating trade tensions between the U.S. and China have boosted safe-haven demand in the market. Investors are closely monitoring the upcoming U.S. jobs data for further insights into the Federal Reserve's future interest rate policy trajectory.

In the UAE, gold prices increased. 24K gold rose by 1 dirham to 345.75 dirhams, and 22K gold increased by 0.75 dirhams to 321.5 dirhams. Concurrently, 21K gold rose by 0.75 dirhams to 308.25 dirhams, and 18K gold increased by 0.5 dirhams to 264.25 dirhams.

Spot gold globally was down 0.01% at $2,869.69 per ounce by 5:26 GMT, after hitting a record high of $2,882.16 per ounce earlier in the session. Meanwhile, U.S. gold futures fell 0.17% to $2,888.19 per ounce.

The dollar index rose 0.15% to 107.74, making gold less attractive to investors holding other currencies. U.S. President Trump's new 10% tariff on Chinese imports took effect on Tuesday. In response, China filed a complaint with the World Trade Organization, accusing the new tariffs and the elimination of duty-free treatment for low-value packages of being "protectionist" and in violation of WTO rules.

As a response to the U.S. tariffs, China has also imposed tariffs on U.S. goods, escalating the trade war between the two countries and further supporting gold prices near record highs. Three Federal Reserve officials warned on Monday of inflationary risks from the Trump administration's tariff plans, with one suggesting that interest rate cuts should be slower than initially planned due to uncertainty in the price outlook.

Given the market uncertainty created by the current U.S. administration and the fact that central bank gold purchases show no signs of slowing, gold prices are highly likely to break through $3,000 this year. Currently, market focus also includes the U.S. weekly initial jobless claims data (released at 13:30 GMT) and Friday's non-farm payroll report, which are expected to provide further insights into the strength of the U.S. economy.

Federal Reserve officials have pointed out that the Trump administration's tariffs and other issues have created significant uncertainty for policy, which is one of the main challenges in determining the direction of U.S. monetary policy in the coming months. A report from Automatic Data Processing (ADP) showed that the private sector added 183,000 jobs in January, up from a revised 176,000 the previous month. However, the U.S. Institute for Supply Management (ISM) services PMI was disappointing, falling to 52.8 in January, offsetting the positive impact of the ADP report.

Affected by the weak data, U.S. Treasury yields fell to their lowest level since mid-December. In addition, market expectations that the Federal Reserve will cut borrowing costs twice this year led to a drop in the dollar to its lowest level in more than a week, supporting gold prices to reach new highs. U.S. Treasury Secretary Scott Bessent said late Wednesday that the focus is on lowering the 10-year Treasury yield, not the Fed's benchmark short-term interest rate. He added that if we reduce energy costs and deregulate the economy, the interest rate issue will naturally be resolved.