Gold rally picked up steam in Dubai this week as prices are rising by every hour, reaching less than Dh10 shy of Dh500 per gram.

The 24K variant of the precious metal jumped Dh9 today to Dh493.25 per gram on Monday evening while 22K rocketed Dh8.5 to Dh456.75 per gram. Among the other variants, 21K and 18K shot up to Dh438 and Dh375.5 per gram, respectively.

If this upward trend continues tomorrow, prices in Dubai will cross Dh500 per gram for the first time ever.

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Spot gold was just shy of $4,100 per ounce on Monday evening, trading at $4,097.5 per ounce at 6.45 pm UAE time due to US-China trade tensions and expectation of US Federal Reserve interest rate cuts.

Amidst the trade and geopolitical tensions around the world, Bank of America on Monday hiked its forecast for gold to $5,000 per ounce and silver to $65 per ounce.

"The White House's unorthodox policy framework should remain supportive for gold given fiscal deficits, rising debt, intentions to reduce the current account deficit/capital inflows, along with a push to cut rates with inflation around three per cent,” the American bank said in the latest note.

“Gold prices have reached historic highs, breaking above the $4,000 mark, which is a substantial climb from levels near $2,620, where it started trading this year, that is a little more than 54 per cent in gains year-to-date. While President Donald Trump's recent comments about reintroducing aggressive tariffs on Chinese imports have undeniably amplified geopolitical concerns and boosted safe-haven flows, the ongoing rally in gold is being driven by deeper macroeconomic shifts,” said Mohanad Yakout, senior markets analyst, Scope Markets.

“A key catalyst,” he said,“is the growing expectation of monetary easing by the Federal Reserve in 2025. Despite inflation sticking a little higher but signs of economic softening emerging, especially with the last labor market data, markets are increasingly pricing in a shift toward rate cuts. The potential for lower interest rates makes non-yielding assets like gold more attractive. Adding to this is the uncertainty surrounding the risk of a prolonged US government shutdown, which continues to undermine confidence in fiscal stability and further fuels investor demand for safe-haven assets,” he said.

At the same time, Yakout addd that the global move toward de-dollarization is accelerating.“Central banks, particularly in emerging markets, have been increasing their gold reserves in a bid to reduce reliance on the US dollar. We've seen positive net purchases by central banks in 27 out of the last 28 months. This sustained official sector demand has provided a strong foundation for gold's ascent.”

Moreover, he revealed that concerns around currency debasement are re-emerging.

“With sovereign debt at elevated levels and persistent fiscal deficits across major economies, investors are increasingly turning to gold as a hedge against long-term inflation and the erosion of fiat currency value. All of the above factors have shaped a broader outlook that supports further upside for gold, with Trump's comments serving as just the cherry on top of the cake,” he concluded.

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