Gold prices in the United Arab Emirates remained unchanged on Friday, priced at 392.93 AED per gram. Meanwhile, the price of gold per tola also stayed steady at AED 4,583.10.
In the broader market, the US 10-year Treasury yield increased by five basis points to 4.333%. US initial jobless claims decreased to 215,000, below the forecast of 225,000.
Building Permits and Housing Starts Data
Building permits saw a 1.6% rise to 1.482 million, while housing starts fell to 1.324 million. The rates markets have factored in 86 basis points of Federal Reserve rate cuts by the end of 2025.
Gold is often a safe-haven asset and a hedge against inflation. Central banks are major gold holders, with significant purchases noted in 2022.
Gold prices typically have an inverse relationship with the US dollar and treasury yields. The price is influenced by geopolitical instability and interest rate changes, and mainly moves in relation to the US dollar.
Prices are for reference only and may slightly differ locally. It is advised to conduct personal research before making any investment decisions. Risks include the potential loss of investment and emotional distress.
Given the flat move in gold prices within the UAE at AED 392.93 per gram, traders may interpret the recent inertia as a pause rather than a clear directional cue. With no visible breakout, the attention turns to macroeconomic cues abroad. Over in the US, the uptick in the 10-year Treasury yield to 4.333% indicates stronger demand for yield-bearing assets — often a signal of confidence in economic resilience, though not uniformly bullish for non-yielding commodities like gold.
Simultaneously, weekly jobless claims dipping to 215,000 — undercutting consensus by 10,000 — suggest continued tightness in the labour market. This might complicate hopes for swift monetary loosening, especially when juxtaposed with the increase in building permits. Yet, that optimism is tempered by the drop in housing starts to 1.324 million. Such figures reflect a market still grappling with the drag of elevated rates, with developers potentially wary of overextending amid uncertain demand.
Federal Reserve Rate Cut Expectations
The pricing in of 86 basis points of rate reductions by the end of 2025 tells us that markets are leaning towards a deceleration in policy tightening, or at least an acknowledgment that further hikes are unlikely. Still, nothing here appears imminent. That places short- to medium-term positioning in an interesting spot: real yields remain relatively high, and disinflation hasn’t run its course entirely — yet rate cuts are being priced with increasing confidence.
As has often been observed, gold tends to retreat when the dollar firms and yields climb, which aligns with recent price stasis. Any extension in dollar strength, should it coincide with persistent yield firmness, could pressure gold further. However, we must stay alert to any flare-ups in geopolitical tension — historically these cause gold to appreciate as investors rotate into perceived stability.
Weighing these elements together, there’s little cause to chase price movement blindly. Instead, watching for divergence between actual rate decisions and what markets have already priced could present the clearest signals. Misalignment here often leads to volatility — favourable for options vintages looking to profit from delta-neutral strategies or short-dated calls that can capitalise on abrupt moves.
Readers should consider that central bank buying, which surged in 2022, tends not to shift day-to-day prices but does create longer-term floors. When such demand reemerges visibly, it typically signals strong underlying support. That said, we are currently without explicit data suggesting renewed state-buyer action.
For now, derivatives tied to bullion should be scrutinised with tight attention placed on yield direction and upcoming macro releases — especially core inflation reads and consumer sentiment indicators. These have outsized influence when presumed rate paths come under review.
Option premiums remain moderately priced, and with implied volatility sitting near mid-range, straddle positioning or cautious calendar spreads may offer coverage without pronounced cost. Position sizing should remain conservative under quiet tapes like these, where false breakouts are frequent.
We’re watching volatility creep higher in correlation assets. When dispersion picks up between USD movement and underlying inflation prints, that’s usually our cue to rotate into delta-skewed structures. It’s about timing that entry carefully and leaning on macro data to paint the risk contour.
