Gold prices in the UAE maintained their upward trajectory on Monday, increasing by Dh1.5 per gram. By 6pm UAE time, the 24K variant of the precious metal climbed to Dh331.0 per gram, a rise from Dh329.5 per gram at the end of last week's trading. The other variants, 22K, 21K, and 18K, also saw increases, reaching Dh306.5, Dh296.75, and Dh254.5 per gram respectively.
Spot gold was trading at $2,739.9 per ounce at 6pm, marking a 0.68 per cent increase. Gold's surge continued for the fifth straight day, hitting a new all-time high, buoyed by the easing of monetary policies by major central banks and heightened geopolitical tensions in the Middle East. On Monday, the People’s Bank of China (PBoC) reduced its key interest rates as part of its stimulus measures, following the European Central Bank’s (ECB) rate cut.
Vijay Valecha, chief investment officer at Century Financial, noted that the recent spike in gold prices was driven by traders flocking to safe-haven assets after Israel announced the death of Hamas leader Yahya Sinwar. "Geopolitical tensions escalated further on Monday, with reports of Israel preparing imminent attacks on financial sites linked to Lebanon’s Hezbollah. Additionally, traders are rebalancing their portfolios ahead of the November 5 US election, which polls suggest could be one of the closest in decades between Donald Trump and Kamala Harris," he said.
Valecha further explained that while Chinese investors have pulled back from gold due to the PBoC's stimulus aimed at bolstering equity markets, Western investor interest has surged. "Offshore gold ETFs saw inflows of $1.8 billion last week, and foreign gold mining ETFs attracted $208 million, reversing earlier outflows this year. Moreover, investors are factoring in a 90 per cent chance of a rate cut in November, further fueling gold's rally," he added.
Tito Iakopa, commercial director at FlowCommunity, highlighted that ongoing geopolitical tensions, especially in the Middle East, continue to bolster gold's appeal as a safe-haven asset, with no immediate resolution in sight. "Uncertainty surrounding the upcoming US presidential elections, particularly regarding former US president Donald Trump's potential return and his contentious economic policies, adds to market volatility. As investors navigate these uncertainties, gold remains a crucial hedge against these risks," Iakopa concluded.
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