Gold prices in the United Arab Emirates increased on Tuesday, with the price per gram rising to 492.03 AED from 485.33 AED on Monday. The price of gold measured per tola also saw an uptick, moving to 5,738.98 AED from 5,660.78 AED.

The ongoing shutdown of the US government, beginning October 1, is extended into its third week, awaiting Senate’s decisive vote on the funding plan. Meanwhile, trade tensions between the US and China re-intensified after threats of a 100% tariff on Chinese goods, although this stance was later softened.

Geopolitical Influences On Gold

Geopolitical tensions, notably the escalating Russia-Ukraine conflict, are contributing to gold’s price increase. Additionally, expectations of a potential rate cut by the US Federal Reserve further support the upward trend of gold prices.

The US Dollar remains strong, yet this has minimal impact on the positive sentiment surrounding gold. FXStreet’s calculations adapt international gold prices to the local UAE market, recognising the potential for slight local price variations.

Central banks, which hold significant gold reserves, increased their holdings by 1,136 tonnes in 2022. This is part of the larger context of gold being a widely used hedge against economic instability and currency depreciation.

Market Strategies Amid Economic Challenges

We are seeing a powerful upward trend in gold, driven by a combination of geopolitical tensions and economic worries. The ongoing US government shutdown, now entering its third week, and the escalating conflict in Ukraine are pushing investors towards safe-haven assets. This environment strongly suggests the path of least resistance for gold remains to the upside.

The market has fully priced in a Federal Reserve rate cut for the end of October, with the CME FedWatch Tool now indicating a 98% probability of a 25-basis-point reduction. This dovish shift, a response to recent inflation data showing core CPI falling below 2%, makes holding non-yielding gold more attractive. We see this as a primary catalyst that should provide a strong floor for prices in the coming weeks.

Unpredictability in US-China trade relations, marked by recent tariff threats followed by softer statements, continues to benefit gold. This, combined with the intensifying Russia-Ukraine war, creates persistent demand for assets that are insulated from political whims. These factors are not expected to resolve quickly, providing sustained support for bullion.

Given this backdrop, we should consider strategies that benefit from both rising prices and potential volatility. Buying call options on gold futures or related ETFs could be an effective way to capture further upside. We saw a similar dynamic during the prolonged government shutdown of 2018, which preceded a multi-month rally in gold.

Beyond the immediate headlines, we are seeing relentless physical demand from central banks, which provides a strong underlying bid. The World Gold Council’s latest Q3 2025 report confirmed central banks added another 250 tonnes to reserves, signaling a continued long-term move away from the US Dollar. This fundamental support suggests that any price dips are likely to be short-lived.

Create your live VT Markets account and start trading now.