The Fed is expected to maintain interest rates at 4.5 percent amidst economic uncertainty
Gold prices rose slightly to a record high on Wednesday, as safe haven demand remained solid due to renewed geopolitical tensions in the Middle East and worries over trade tariffs. Investors maintained a largely risk-averse stance ahead of the conclusion of a U.S. Federal Reserve meeting later on Wednesday, which is anticipated to provide further insight into the U.S. economy.
In the UAE, gold rates experienced a notable increase today, with 24-carat gold rising by AED1.5 to reach AED366. The cost of 22-carat gold went up by AED1.25, reaching AED338.75. Likewise, 21-carat gold saw an increase of AED1.5, bringing its price to AED324.75, while 18-carat gold prices climbed by AED1.25 to AED278.5.
The yellow metal surged considerably over the past week as risk appetite was weakened by U.S. President Donald Trump’s ongoing threats of higher trade tariffs, alongside increasing fears of a U.S. recession. The dollar declined on this sentiment, which lent additional strength to gold.
Spot gold increased by 0.1 percent to a record high of $3,039.0 an ounce, while gold futures set to expire in May also rose 0.1 percent to a peak of $3,046.12 an ounce. A Bank of Japan meeting yielded minimal changes on Wednesday, whereas the Bank of England is expected to maintain rates unchanged later in the day.
Gold reached a record high on Tuesday after the Israel-Hamas ceasefire fell apart, indicating heightened tensions in the Middle East. Moderate progress in the discussions surrounding a Russia-Ukraine ceasefire also contributed to increased haven demand.
“From a fundamental standpoint, yesterday’s geopolitical tensions pertaining to the IDF’s comments continue to support the yellow metal. Looking ahead, the main event for the day is the FOMC decision. According to CME’s Fed watch tool, the probability of the interest rate remaining at the current levels is 99 percent; hence, the focus will be on Fed Chair Jerome’s remarks,” remarked Vijay Valecha, chief investment officer, Century Financial, to Economy Middle East.
Read more: UAE gold prices flat, global rates climb on safe-haven demand near $3,000
Anticipation builds as Fed rate decision approaches
The Fed is widely expected to keep interest rates unchanged at 4.5 percent after the conclusion of a meeting later on Wednesday, amidst ongoing uncertainty regarding the U.S. economy under Trump. Officials have frequently highlighted the uncertainty surrounding the near-term economic outlook as Trump pursues his agenda, with limited potential for further reductions in interest rates in the near future.
Also, the Fed is set to unveil its updated summary of economic projections, providing more insight into the central bank’s expectations for the U.S. economy under Trump. Trump’s trade tariffs—particularly his inconsistent stance on measures against Canada and Mexico—have heightened uncertainty over the U.S. economic outlook. The U.S. President has cautioned that he will impose even higher tariffs in early April.
Markets are concerned that increased tariffs will disrupt global trade and elevate U.S. inflation, thereby hindering local economic growth. Other precious metals experienced a slight decline on Wednesday, cooling off after a robust surge in recent sessions. Platinum futures fell 0.4 percent to $1,016.90 an ounce, while silver futures decreased by 0.5 percent to $34.55 an ounce.
Read more: UAE gold prices surge AED2.25, global rates climb over $3,000 on tariff fears
Copper prices steady with focus on China stimulus
In the realm of industrial metals, copper prices stabilized after a series of significant gains in recent sessions, driven by growing optimism regarding top importer China. Benchmark copper futures on the London Metal Exchange fell 0.1 percent to $9,901.85 a ton, while May copper futures increased by 0.3 percent to $5.0213 a pound.
China recently outlined additional fiscal measures aimed at enhancing private spending and supporting the economy, which has sparked increased optimism regarding Beijing’s growth prospects in 2025. Improving economic conditions in China are expected to strengthen its demand for copper. Trump also plans to impose tariffs on copper, which could significantly restrict physical U.S. supplies in the near term.
