Gold markets in Dubai opened with notable declines on Thursday morning as investor caution intensified ahead of the US Federal Reserve’s critical policy meeting. According to the Dubai Jewellery Group’s market data, 24-karat gold dropped by Dh1.25 per gram to reach Dh505.75. Corresponding decreases affected other variants: 22K fell to Dh468.25, 21K to Dh449.0, 18K to Dh384.75, and 14K to Dh300.25 per gram. The international spot gold market mirrored this trend, trading at $4,193.1 per ounce with a 0.2 percent decline.
Market analysts attribute this cautious trading pattern to heightened anticipation surrounding the Federal Reserve’s impending interest rate decision. Linh Tran, market analyst at xs.com, emphasized that the US interest rate cycle remains the dominant factor influencing gold’s medium-term trajectory. ‘Recent indicators showing cooling US growth and consumption patterns have strengthened market expectations that the Federal Reserve will initiate rate reductions in the foreseeable future,’ Tran noted.
The analyst further explained that declining bond yields, which retreated to approximately 4.02 percent in late November before modestly recovering to 4.088 percent, have created favorable conditions for gold appreciation. This dynamic reduces the opportunity cost associated with holding non-yielding assets like gold. Historical patterns suggest that periods of declining real interest rates typically generate supportive environments for precious metals, with current market conditions following this established pattern.
Looking toward 2026, Tran projected significant upside potential for gold if the Fed enters a sustained rate-cutting cycle. ‘Gold maintains substantial room to establish new record highs, potentially reaching $4,500 per ounce within a monetary easing environment that appears increasingly probable for the coming year,’ Tran added.
Alex Kuptsikevich, Chief Market Analyst at FxPro, highlighted growing market focus on global monetary policy divergence. While the Federal Reserve is expected to reduce rates to three percent throughout 2026, the Bank of Japan simultaneously forecasts rate increases to 1.25 percent. This policy contrast creates complex dynamics for currency markets and precious metal valuations.
Kuptsikevich referenced additional uncertainty stemming from political developments, noting that President Donald Trump’s announcement regarding the new Fed chair appointment timeline—now expected in early 2026 rather than by Christmas—has introduced further dollar volatility. Market expectations surrounding Kevin Hassett’s potential leadership appointment at the Federal Reserve have amplified concerns about expanded monetary easing measures, creating additional downward pressure on the US dollar that could ultimately benefit gold prices.