Analysts anticipate that the gold price surge will persist due to heightened geopolitical tensions in the Middle East and the anticipated interest rate cuts by the US Federal Reserve, potentially hitting Dh365 per gram in Dubai in the near future. Consequently, they advise that now is an opportune moment to invest in gold, as prices could increase by approximately 25 percent in the coming months. The precious metal, historically viewed as a safe-haven asset, saw its prices rise by Dh6 per gram over the last 24 hours as of Thursday morning, driven by geopolitical tensions and the assassination of a Hamas leader. On Wednesday, gold prices surged by $40 in a single session as the Fed's stance grew more dovish, coinciding with escalating tensions in the Middle East following recent events in Beirut and the assassination.
On Thursday afternoon, the 24K gold was trading at Dh296 per gram, while 22K, 21K, and 18K were priced at Dh274.0, Dh265.25, and Dh227.25 per gram, respectively. Spot gold was trading at $2,434.68 an ounce at 12.45 pm UAE time. Gold has exhibited an impressive 18.55 percent increase year-to-date (YTD). Globally and in the UAE, gold prices reached an all-time high in mid-July, equivalent to about Dh300 per gram in the UAE. Post this peak, gold has maintained its gains by trading sideways in the past two weeks, awaiting the potential final Federal Open Market Committee (FOMC) meeting before the Fed's anticipated rate cuts in September.
Vijay Valecha, chief investment officer at Century Financial, noted that the ongoing regional conflict could escalate, further supporting gold prices. He highlighted that as the Fed hints at potential rate cuts by September, lower interest rates decrease the opportunity cost of holding non-yielding assets like gold, exerting pressure on the dollar and making gold more attractive to investors holding other currencies. Forecasts indicate a promising trajectory for gold, with potential target ranges of $2,700-$3,000, translating to Dh330-Dh365 in the upcoming months, according to Valecha. He also mentioned that local factors in the UAE, such as the onset of the tourist season and the upcoming Diwali and wedding seasons, could boost gold demand and prices.
Ole Hansen, head of commodities strategy at Saxo Bank, stated that based on current trends and factors supporting gold prices, it is possible that gold prices could surpass Dh300 per gram again in the coming sessions. He attributed this resilience to strong demand from family offices, wealthy individuals, and central banks, along with the prospect of an earlier-than-expected US rate-cutting cycle. Hansen emphasized that geopolitical risks, robust retail demand in China, and continued central bank purchases provide solid support for gold prices. He noted that crossing Dh300 per gram, approximately $2,540 per ounce, would surpass Saxo Bank's year-end target of $2,500, contingent on the US rate-cutting cycle and a relatively weak dollar, creating a favorable environment for higher gold prices.
