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Gold seen holding above $4,400 as geopolitics offset rate risks
Analysts remain broadly bullish on gold despite higher US yields and rate hike expectations, citing central-bank buying, geopolitical tensions and resilient investor demand
- PUBLISHED: Tue 8 Sept 2026, 9:28 PM
Gold prices are likely to remain supported above the $4,400-an-ounce level despite mounting pressure from stronger US economic data and the prospect of higher interest rates, with analysts pointing to geopolitical risks, central-bank purchases and investor demand as key pillars underpinning the precious metal’s rally.
Spot gold edged 0.2 per cent lower to $4,396.19 an ounce on Tuesday, while US gold futures for December delivery fell 0.8 per cent to $4,441.30, according to Reuters data. The decline came as rising oil prices heightened inflation concerns and reinforced expectations that the Federal Reserve could tighten monetary policy further, increasing the opportunity cost of holding non-yielding assets such as gold.
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The pullback was also reflected in the UAE market. In Dubai, 24K gold traded at Dh530 per gram on Tuesday evening, slightly below Monday’s Dh530.75. Other categories were priced at Dh491 for 22K, Dh470.75 for 21K and Dh403.50 for 18K gold.
Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, said the market is currently balancing two opposing forces: resilient US economic data and heightened geopolitical uncertainty. “Gold holding above the US $4,400 area suggests defensive demand is still strong enough to offset the pressure from a resilient labour market,” he said. He added that investors are closely watching whether Treasury yields continue rising, whether the dollar strengthens further and how tensions surrounding Iran evolve.
US labour market data released this week underscored that challenge. According to Aslam, August nonfarm payrolls rose by 162,000, well above expectations, reinforcing the view that the US economy can withstand restrictive monetary policy for longer. However, safe-haven buying linked to geopolitical tensions helped bullion stabilise after an initial sell-off.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, said markets are being pulled in different directions by rising crude oil prices, higher bond yields and a softer US dollar. Gold briefly rose to $4,442 during Asian trading before easing back. “Most developments this week are likely to remain sideshows ahead of the US CPI and PPI releases, which will be critical in shaping expectations for the Fed’s September meeting,” he said.
Despite near-term volatility, Hansen remains bullish on gold’s longer-term prospects. He said central banks, particularly in emerging markets, continue to diversify reserves away from the US dollar, creating a relatively price-insensitive source of demand. Concerns over fiscal sustainability, rising government debt and geopolitical uncertainty are also strengthening gold’s role as a store of value.
Nick Spencer-Skeen, Senior Executive Officer at Lunaro Markets, noted that gold found support around $4,300 before finishing the week above $4,400, aided by earlier dollar weakness and continued geopolitical demand.
Vijay Valecha, Chief Investment Officer at Century Financial, said a weaker US dollar has helped bullion recover from its recent pullback. “Investor demand remains a key pillar of support,” he said, pointing to renewed inflows into gold-backed exchange-traded funds and continued central-bank purchases. China’s central bank added 650,000 ounces to its reserves in August, extending its buying streak to 22 months.
Valecha cautioned that rising oil prices and inflation risks linked to disruptions in the Strait of Hormuz could keep markets volatile and strengthen the case for higher interest rates. Nevertheless, he said gold retains a “positive bias above $4,400”, with a sustained move beyond $4,435 potentially opening the path towards $4,500 an ounce.
For now, analysts broadly agree that while inflation data and Federal Reserve decisions may drive short-term swings, structural demand and geopolitical uncertainty continue to support the longer-term outlook for gold.
Associate Editor Somshankar Bandyopadhyay brings more than three decades of experience to the KT newsroom. Currently, he manages the news production of the business section, ensuring that the top economic and business news of the day reaches its readers.