Gold prices rebounded Tuesday as escalating geopolitical tensions in the Middle East drove investors toward safe-haven assets.
In Dubai, gold rates showed slight fluctuations: 24 carat gold traded at AED406.5, 22 carat at AED373.1, 21 carat at AED356.4, and 18-carat at AED306.4.
Spot gold climbed 0.4%, settling at $3,396.67 an ounce as of 02:39 GMT, recovering from Monday’s drop of over 1%. It currently trades above $3,389. Meanwhile, U.S. gold futures held steady at $3,416.30, currently above $3,405.
KCM Trade’s Chief Market Analyst Tim Waterer explained, “Market sentiment continues to swing between escalation and de-escalation regarding events in the Middle East, driving gold’s moves around the $3,400 level.”
Fed Meeting Anticipation
Gold remains a favored safe haven amid geopolitical and economic uncertainty as investors await the U.S. Federal Reserve’s policy decision expected Wednesday.
The Fed is widely expected to keep rates steady, but all eyes are on Chair Jerome Powell’s outlook on potential future rate cuts. Markets currently price in two rate reductions by year-end.
Other precious metals also gained: spot silver rose 0.3% to $36.41 per ounce, platinum increased 0.6% to $1,251.20, and palladium edged up 0.2% to $1,031.68.
Vijay Valecha, Chief Investment Officer at Century Financial, told Economy Middle East, “The Fed is expected to hold the federal funds target range at 4.25%–4.50% during the June FOMC meeting, marking the seventh consecutive pause since December. CME FedWatch Tool data shows a 99.8% probability of no rate change this week.”
Valecha added that while no immediate change is anticipated, markets are pricing in a first rate cut by September. “Bond futures traders see about a 66% chance of a cut then, with a 94% chance of at least two cuts by year-end,” he said, reflecting growing confidence that inflation is cooling amid a still-strong but moderating labor market.
He also noted, “Recent government data indicates easing inflation alongside steady job growth. The May CPI report showed slower price increases than expected, and employment data revealed robust job creation. Chair Powell is likely to emphasize a cautious, data-dependent approach—waiting for clear inflation easing while ensuring policy remains restrictive enough to meet targets without harming the labor market.”
