Gold Prices Surge Amid Trade Negotiations and Economic Uncertainty
Gold prices rose this week due to investor fear prompted by US trade negotiations, a weakening dollar, and expectations of lower interest rates. Spot Gold increased by 0.8 percent to $3,328.71 per ounce on Tuesday, while Gold Futures rose 1 percent to $3,339.70 in August. This gain almost offsets the losses from the previous week, which were triggered by a short-lived ceasefire between Israel and Iran.
Macroeconomic Factors Driving Gold Prices
The rally in gold prices is powered by several macroeconomic factors, particularly concerns about the upcoming period of President Donald Trump’s trade agreements with several key countries. Investors are preparing for the possibility of steep mutual tariffs – up to 50 percent – if agreements are not secured with countries like Japan.
Impact on Local Bullion Rates
In the United Arab Emirates, rising global prices are already reflected in local bullion rates. As of Tuesday, 24-carat gold was at 400.25 dH per gram, while 22-karat gold was at DH370.75, 21-karat at DH355.50, and 18-carat at DH304.75. This increase comes at a time when foot traffic in Dubai’s Gold Souk and other jewelry shops had just started to recover, supported by the Summer Surprises 2025 shopping festival.
Consumer Demand and Retail Strategies
However, jewelers warn that consumer enthusiasm could wane if prices continue to be above 370 dH per gram – a historical level that is typically associated with reduced demand from significant buyers. To stimulate purchases, retailers are relying on advertising campaigns. The Dubai Summer Surprises raffle has revised its threshold to 1,000 dH from 1,500 dH to cushion the effects of rising prices.
Gold as a Safe Haven
Experts in the bullion market say that with the global macroeconomic environment in flux, gold is once again positioning itself as a safe haven – a role it has played for centuries – especially as a hedge against inflation, trade turbulence, and tax uncertainties that are keeping investors on edge.
Market Analysis and Outlook
Vijay Valecha, Chief Investment Officer at Century Financial, said that the rebound reflects the security of investors seeking safe-haven assets, which has been increasing due to macroeconomic uncertainty. The weakening US dollar, combined with renewed fears about the government’s budget deficit and legislative issues, has only reinforced gold. Further support from expected interest rate cuts could result in the Federal Reserve. If the Fed signals a dovish stance in upcoming meetings, gold will likely attract even more attention from investors.
Economic Indicators and Technical Analysis
This week, the market focus is on important economic indicators, including the US non-farm payroll statements on Thursday and the PMI data for purchasing managers from S&P Global and the Institute for Supply Management. These releases could offer a clearer direction of the Fed’s policy and influence both the financial sector and the gold market. From a technical standpoint, analysts have said that gold has violated a descending channel resistance in the 4-hour chart, which could increase prices to $3,350, the upper limit of the Bollinger band and the 100-day moving average.
Global Demand and Price Outlook
Worldwide, the attractiveness of gold is further underpinned by expectations of persistent dollar weakness. The US dollar index remained near three-year lows during Asian trading periods, making dollar-denominated gold more attractive to owners of other currencies. Analysts from Commerzbank and HSBC believe that gold will remain in the range of $3,100 to $3,500 in the third quarter, with fiscal policy, currency movements, and global growth indicators guiding the next step.
Other Precious Metals
At the same time, silver prices rose by 0.4 percent to $36.00 per ounce, while platinum futures decreased by 0.4 percent to $1,360.45. Industrial metals also saw mixed movement, with copper futures on the London Metal Exchange rising by 0.2 percent to $9,839.95 per ton, and US copper futures increasing by 1.2 percent per pound, driven by stronger growth in China’s Caixin manufacturing PMI for June.
Long-term Support for Gold
Precious metal analysts from Metals Focus find that strong central bank buying and ongoing inflation concerns could also support gold in the long term. "Central banks are not only diversifying from the US dollar but also hedging against systemic risks. This persistent demand creates a floor even in times of peace," says a recently published report.
