Gold prices have remained steady following a record-setting performance last week, driven by escalating geopolitical tensions, fears over rising tariffs, and growing optimism about possible interest rate cuts by the U.S. Federal Reserve.
In the UAE on Monday, gold rates held steady with 24-carat gold priced at AED 359.5, 22-carat at AED 334.5, 21-carat at AED 320.75, and 18-carat at AED 275.
Gold Reaches Record High
Spot gold saw a modest increase of 0.1% to $2,986.53 per ounce as of 03:07 GMT, having recently surpassed the $3,000 mark for the first time and reaching a historic high of $3,004.86 on Friday. Meanwhile, U.S. gold futures edged down 0.2% to $2,994.60.
The precious metal’s continued rise is being fueled by ongoing global instability, concerns over trade conflicts, and market expectations that the U.S. Federal Reserve might soon lower interest rates, which has pushed demand for gold as a safe-haven asset.
U.S. Consumer Sentiment Drops Amid Trade War Concerns
In the United States, consumer sentiment took a hit in March, dipping to its lowest level in almost two and a half years. The drop in confidence is largely attributed to concerns over inflation driven by President Donald Trump’s sweeping tariffs, which have intensified fears that the ongoing trade war could stoke prices and hurt the economy. Rising inflation expectations have led to heightened anxiety in financial markets.
Geopolitical Instability Escalates
Geopolitical tensions continue to add pressure on global markets, particularly with the United States’ ongoing military involvement in Yemen. U.S. forces have vowed to continue their operations against the Houthi rebels until they cease their attacks on shipping. Recently, the Houthis launched a missile and drone strike on the USS Harry S. Truman aircraft carrier and its vessels in the northern Red Sea.
Trade War with Europe Fuels Economic Uncertainty
The escalating trade war between the U.S. and Europe also remains a significant source of concern. On Thursday, President Trump threatened to impose a 200% tariff on European wine, cognac, and other alcoholic imports, in retaliation for the European Union’s plans to introduce tariffs on American whiskey and other products in April. This follows Trump’s recent imposition of a 25% duty on steel and aluminum imports, further rattling financial markets and fueling economic uncertainty.
Weaker Dollar Supports Gold Prices
The recent decline in the U.S. dollar, sparked by disappointing economic data, has contributed to the rise in gold prices. A preliminary reading of the University of Michigan’s Consumer Sentiment Index showed a sharp drop to 57.9 in March, down from 64.7 in February. This marks the lowest level for the index since November 2022 and is below market expectations of 63.1.
Ceasefire Developments Could Impact Gold Demand
Despite the continued demand for gold as a safe-haven asset, any positive shifts in the geopolitical landscape, such as a potential ceasefire in the Russia-Ukraine conflict, could result in a pullback in prices. Last week, the U.S. and Ukraine proposed a 30-day ceasefire with Russia, and Trump’s envoy, Steve Witkoff, mentioned that President Trump plans to speak with Russian President Vladimir Putin this week. Witkoff noted that Putin “accepts the philosophy” of Trump’s ceasefire and peace terms, potentially signaling a reduction in global uncertainties and, by extension, a possible dip in gold prices.
Gold Continues to Shine in 2025
Gold has gained roughly 14% so far this year, reinforcing its role as a hedge against political risks and inflation. Investors are now looking to the Federal Reserve’s upcoming monetary policy meeting, followed by comments from Fed Chair Jerome Powell, which could provide further direction for gold prices in the near term.
