Gold sees sudden Dh8 price spike after weekly loss: Here's why

Dubai: Gold prices bounced back on Monday, climbing more than 2% after two straight weeks of losses, as investors turned cautious ahead of a key US interest rate decision and reacted to ongoing uncertainty around global trade.

Globally, spot gold rose to around $3,316 an ounce, clawing back most of last week’s 2.4% drop. In the UAE, prices rose by Dh8 a gram by Monday evening, with a gram of 22K selling at Dh369.50 (and Dh399 for 24K).

Why sudden move?

The sudden move comes as markets await the US Federal Reserve’s upcoming decision on interest rates, expected on Wednesday. Although the Fed is likely to hold rates steady, investors are closely watching for any signals about future rate cuts or changes in economic outlook.

The recent recovery in gold follows a sharp rally earlier this year, when prices surged 26% to a record high above $3,500 an ounce in April. That run-up was driven largely by fears over global economic stability, rising geopolitical tensions, and strong demand from central banks and Chinese investors.

Monday’s spike was also supported by a dip in the US dollar. A weaker dollar tends to make gold more attractive to international buyers, since the metal is priced in dollars. The Bloomberg Dollar Spot Index fell by 0.4%, adding to gold’s appeal.

Adding to the uncertainty were recent comments from US President Joe Biden, who said there are no immediate plans to hold talks with Chinese President Xi Jinping. Trade tensions between the US and China have weighed on global markets in recent weeks, and gold often benefits in such risk-off environments as a "safe-haven" asset.

Although the US economy continues to show strength — with surprisingly strong job data reported last week — this only complicates the picture for rate decisions. Some, including former US President Donald Trump, argue that rates should be cut regardless, but analysts believe the Fed may hold steady due to a still-firm labor market.

Next steps?

For everyday gold buyers and personal finance watchers, this means the price of gold may remain volatile in the short term. If you’re investing in gold or considering a purchase, it’s worth keeping an eye on global economic news, especially around interest rates and trade policies. Gold tends to rise during times of uncertainty, and recent market moves suggest more turbulence could be ahead.