Gold prices saw an uptick on Monday following a resumption of gold purchases by China’s central bank after a six-month break. Investors are also awaiting upcoming U.S. inflation data to gain more clarity on the Federal Reserve’s future policy decisions.
In the UAE, gold prices showed slight increases. The price of 24-carat gold rose by AED0.25 to AED319.25, while 22-carat gold remained steady at AED295.5. Both 21-carat and 18-carat gold gained AED0.25, reaching AED286.25 and AED245.25 respectively.
On the global stage, spot gold increased by 0.31%, reaching $2,641.27 per ounce by 6:19 GMT. This represents a 0.84% rise over the last month, after reaching a record high of $2,790.15 at the end of October. U.S. gold futures also saw a slight increase, rising 0.14% to $2,663.39.
The dollar index gained 0.11% to 106.17, which made gold less appealing to holders of other currencies.
China’s decision to resume gold purchases is expected to enhance investor demand, particularly after the People’s Bank of China (PBOC) paused its buying streak earlier this year. This renewed activity follows China’s proactive stance in safeguarding its economy amid shifting global conditions. As a result of robust central bank purchases, easing monetary policies, and geopolitical concerns, gold prices have reached multiple record highs in 2024, putting the metal on track for its strongest performance since 2010, with a 28% increase thus far.
Gold’s reputation as a safe-haven investment during times of economic and political uncertainty continues to drive its appeal, especially in environments where interest rates are low.
Traders are closely monitoring U.S. inflation data, which will be released on Wednesday, as it could offer insights into the Federal Reserve’s policy direction and its potential impact on gold prices. The recent U.S. jobs report revealed a significant increase in nonfarm payrolls, which raised expectations for a 25-basis-point rate cut by the Fed this month. According to the CME FedWatch tool, traders are pricing in an 83.4% likelihood of this rate cut.
Several Federal Reserve officials have shared their views on the economic outlook. Cleveland Fed President Beth Hammack noted that a modestly restrictive monetary policy might be necessary, while others, like San Francisco Fed President Mary Daly, cautioned that further rate hikes could be implemented if inflation begins to accelerate again. Chicago Fed President Austan Goolsbee mentioned that the labour market appears stable, and inflation progress is encouraging, though any pause in rate cuts would depend on changes in inflation or the labour market.
Concerns about inflation persist, with some speculating that President-elect Trump’s policies could reignite inflationary pressures, prompting the Fed to take a less dovish stance. His trade tariffs, especially with major trading partners like Mexico, Canada, and China, could also influence the global economic outlook and bolster demand for gold as a safe-haven asset.
While gold saw gains, the broader precious metals market experienced mixed movements. Spot silver declined by 0.10% to $30.95, while platinum rose by 0.25% to $932.10, and palladium saw an increase of 0.80%, reaching $963.67.
Gold remains an attractive option for investors amid ongoing geopolitical tensions and economic uncertainty, with its value likely to be influenced by both central bank policies and inflation data in the coming weeks.
London-listed company KEFI Gold and Copper plc (LON:KEFI) is an exploration and development company focused on gold and copper deposits in the highly prospective Arabian-Nubian Shield. The Company operates in Ethiopia and Saudi Arabia with projects including Tulu Kapi project, Jibal Qutman EL and Hawiah.
