Gold Hits Record High Amid Dollar Slide: What Investors and Businesses in Oman Should Watch Now
Gold prices surged past the critical $4,200-per-ounce mark for the first time on Wednesday, driven by growing expectations of additional US interest rate cuts and renewed concerns over US-China trade tensions, which heightened demand for safe-haven assets.
As of 0659 GMT, spot gold increased by 1.4%, reaching $4,200.11 per ounce. Meanwhile, US gold futures for December delivery rose 1.3% to $4,218.00.
In Oman, gold prices on Wednesday were recorded as follows:
- 24-karat: RO52.850
- 22-karat: RO49.300
- 21-karat: RO46.050
- 18-karat: RO39.250
StoneX senior analyst Matt Simpson noted that the ongoing US government shutdown and dovish remarks from Federal Reserve Chair Jerome Powell have given fresh momentum to rising gold prices.
Powell commented on the US labor market’s subdued condition, while indicating the economy might be on a "somewhat firmer trajectory than expected." He emphasized that future interest rate decisions would be made on a “meeting-by-meeting” basis, aiming to balance labor market weakness against persistent inflation above target.
Investors are nearly certain that the Federal Reserve will implement 25 basis-point rate cuts in both October and December. Gold traditionally performs well in low-interest-rate environments and periods of political and economic uncertainty.
Gold has rallied by 59% year-to-date, fueled by multiple factors including geopolitical and economic uncertainties, expectations of US rate cuts, strong central bank purchasing, the trend of de-dollarization, and substantial inflows into exchange-traded funds (ETFs). Simpson added that the rally has developed into a momentum-driven trade, with traders buying in to chase rapidly rising prices.
Trade tensions escalated recently as former US President Donald Trump indicated Washington is considering reducing some trade ties with China, including in sectors like cooking oil. Both nations imposed reciprocal port fees starting Tuesday.
The International Monetary Fund (IMF) raised its global growth forecast for 2025, citing better-than-expected tariff and financial conditions but warned that renewed US-China trade frictions could hinder economic growth.
Following Powell’s comments, the US dollar weakened against a basket of currencies on Wednesday. Stock markets rebounded as concerns over the trade war subsided, with investors eager to continue a prolonged tech-sector rally.
Powell, who has balanced controlling inflation with supporting employment throughout the year despite pressure from Trump to lower borrowing costs sooner, recently announced the first rate cut since December. On Tuesday, he signaled that further cuts may be forthcoming.
He observed that "in this less dynamic and somewhat softer labor market, the downside risks to employment appear to have risen," while longer-term inflation expectations remain aligned with the Federal Reserve’s 2% target. Powell acknowledged the challenges in navigating policy between employment and inflation goals, describing the path ahead as not risk-free.
Additionally, Powell hinted that the Federal Reserve may soon halt the reduction of its holdings in bonds and other assets purchased during the pandemic, a move intended to keep borrowing costs low and bolster the economy.
This combination of factors continues to shape the gold market and broader financial landscape as investors adapt to evolving economic signals.
Special Analysis by Omanet | Navigate Oman’s Market
The surge of gold prices above $4,200 per ounce signals heightened economic uncertainty and a low-interest-rate environment, creating a bullish opportunity for investors and businesses in Oman to hedge against market volatility. Smart investors should consider increasing exposure to gold and related assets as geopolitical tensions and potential US rate cuts drive safe-haven demand higher, while entrepreneurs in the precious metals sector can capitalize on rising local gold prices to boost trade and retail. However, they must also stay vigilant of geopolitical developments that could abruptly impact market sentiment.
