UAE gold prices rise AED1.25, global rates set for sixth consecutive weekly gain

Fueled by trade war anxieties and the looming release of a crucial U.S. jobs report, gold prices surged on Friday, nearing historical highs and on track for a sixth consecutive week of gains, underscoring its allure as a safe-haven asset. This sustained upward trend reflects investor confidence in gold amidst global economic uncertainties.

In the UAE, gold prices also experienced an uptick. 24K and 22K gold rose by Dh1.25 each, reaching Dh345.5 and Dh321.5 per gram, respectively. Concurrently, 21K gold increased by Dh1.25 to Dh308.25, and 18K gold climbed by Dh1 to Dh264.25, demonstrating a broad-based increase across different purities.

Spot gold prices globally rose 0.55% to $2,866.28 per ounce by 5:09 GMT, marking a weekly gain of over 2%. Gold prices had previously touched a record high of $2,882.16 per ounce on Wednesday. Simultaneously, U.S. gold futures increased by 0.42% to $2,888.92 per ounce, reinforcing the positive sentiment in the gold market.

Earlier in the week, the World Trade Organization indicated that China had filed a dispute regarding U.S. tariffs. In response to President Trump's imposition of 10% tariffs on Chinese imports, China also announced tariffs on certain U.S. goods. This signifies a renewed trade war between the world's two largest economies, which continues to drive safe-haven demand for gold, further bolstering its price.

Inflation risks stemming from the U.S. Trump administration's tariff plans prompted warnings from three Federal Reserve officials on Monday, with one suggesting that slower rate cuts than initially planned are needed due to uncertainty in the price outlook. Chicago Federal Reserve Bank President Austan Goolsbee stated on Thursday that an economy with full employment, solid growth, and low inflation would allow the Fed to continue cutting rates. However, the effects of new tariffs and other policy changes introduce uncertainty, necessitating a more gradual approach.

Dallas Federal Reserve Bank President Lorie Logan stated that significant progress has been made on inflation, but the U.S. labor market remains too strong to prompt the central bank to cut rates in the near term. The U.S. Labor Department reported on Thursday that initial claims for unemployment benefits for the week ending February 1 rose to 219,000, an increase from the previous week's revised figure of 208,000, indicating a slight softening in the labor market.

U.S. Treasury Secretary Scott Bessent stated on Thursday that the Trump administration is not particularly concerned about the Fed's interest rate trajectory, but rather focused on lowering the 10-year U.S. Treasury yield. Earlier in the week, the benchmark 10-year U.S. Treasury yield fell to its lowest level since December 12, as markets bet on two Fed rate cuts by the end of 2025, further benefiting gold prices.

Amidst rising gold prices, the precious metals market showed mixed performance on Friday. Spot silver rose by 0.12% to $32.24 per ounce, and platinum increased by 0.08% to $986.31 per ounce. However, palladium fell by 0.24% to $976.25 per ounce. Both silver and platinum are trending upwards for the week, while palladium is on track to record a weekly loss, indicating varying market dynamics within the precious metals sector.

Given the current market uncertainty created by the U.S. government, and with no signs of a slowdown in central bank purchases, gold prices could very well surpass $3,000 this year. Focus now shifts to the U.S. jobs report due at 13:30 GMT, where investors will be seeking clues about the U.S. interest rate cycle.

Gold is traditionally considered a safe investment during times of economic and geopolitical turmoil, but higher interest rates reduce the appeal of this non-yielding asset. Therefore, the upcoming economic data and policy decisions will be crucial in determining gold's future trajectory.