Gold Prices Drop Below $4,000 as Mideast Tensions Ease; Dubai Rates Remain Steady

Gold price drop below $4,000 mark on Friday, as it closed off from the record high of the week because the geopolitical tension in the Middle East showed signs of easing. However, the yellow metal remained on track for its eighth consecutive weekly gain due to ongoing global uncertainties and rising expectations of additional U.S. interest rate cuts.

Globally, spot gold edged down 0.09% to $3,957.01 per ounce by 4:24 GMT. However, the US gold futures for December delivery dipped 0.16% to $3,966.30. However, gold is still up by 2.2% for the week, even with the pullback. Hence, it shows stronger investor demand for safe-haven assets amid economic concerns and potential monetary easing.

Dubai Gold Rates Hold Firm

Dubai gold prices stayed mostly stable on Friday in the  United Arab Emirates (UAE). However, the following are the current rates after gold prices drop:

• 24-carat gold held at AED476.75,
• 22-carat gained AED0.25 to AED441.50,
• 21-carat remained steady at AED423.25
• 18-carat gold rose slightly by AED0.50 to AED363.25

The retail gold market of Dubai continues to mirror international trends while maintaining due to consistent local demand. However, gold buyers in the UAE are closely monitoring global price movement, especially due to the U.S. monetary policy and geopolitical developments.

Ceasefire in Gaza Triggers Gold Price Drop

The gold price rallied above $4,000 per ounce earlier this week by reaching a record high of $4,059.05. However, the rally was largely driven by heightened tensions in the Middle East. Yet, prices corrected slightly after a ceasefire deal between Israel and Hamas was announced on Thursday, which signals the first phase of US President Donald Trump’s campaign to end the Gaza conflict. 

The deal was ratified by the government of Israel on Friday. However, it includes a halt in attacks,  a partial withdrawal from Gaza, and the release of hostages in exchange for Palestinian prisoners. Hence, the easing of tensions decreased the geopolitical risk premium, which prompted some investors to take profits from the record run of gold. 

Despite this dip, gold has surged more the 52 percent this year due to fears of global instability, robust central bank purchases, and expectations of lower U.S. interest rates.

Rate Cut Expectations Support Gold Outlook

Investors’ sentiment towards gold remains largely bullish. However, analysts point to the  U.S. Federal Reserve’s dovish stance as a key driver. Moreover, minutes from the Fed’s September meeting revealed that policymakers were concerned about labor market risks. This reinforces expectations of further rate cuts.

According to the CME FedWatch Tool. 25-basis-point rate reduction of the  Fed marked the beginning of a new easing cycle. Now, traders are expecting an extra 25-basis-point cut in October and December, plus the probabilities of 95 percent and 80 percent. 

Gold ETF Inflows and Market Trends

According to the World Gold Council, gold-backed exchange-traded funds (ETFs) saw record inflows in September by totalling $26 billion in the quarter. However, it is one of the strongest on record. 

However, this surge shows growing investor confidence in gold as a hedge against inflation, currency volatility, and economic slowdown. Moreover, analysts believe that the long-term outlook is going to stay positive as long as geopolitical risks and inflation concerns persist, even with the short-term corrections like Friday’s dip.

Other Precious Metals Show Mixed Trends

The broader precious metals market displayed mixed movements. Below are the details related to the price of other precious metal:

• Silver rose 0.15% to $49.19 per ounce. Hence, it ease from Thursday’s record high of $51.22.
• Platinum fell 1.45% to $1,595.05
• Palladium dropped 2.3% to $1,379.13.

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