Gold prices in UAE fall as global trends weigh on bullion

Gold prices in the UAE have dropped this week, mirroring global trends driven by a stronger US dollar and shifting expectations around Federal Reserve rate cuts.

In Dubai, 24-carat gold was priced at Dhs310.50 on Thursday, with 22-carat at Dhs287.50.

The fall in prices is significant for UAE residents, where gold plays a key role in savings and investments.

Vijay Valecha, chief investment officer at Century Financial, noted that the global factors at play have intensified pressure on gold.

“There are many fundamental factors that have driven gold to a 30 per cent gain this year, which still remain in force. For instance, central bank purchases are strong, particularly in emerging economies,” Valecha said.

Globally, gold is down more than 4 per cent this week, its worst performance in over three years. Spot gold is trading at $2,569.69 per ounce, sliding from a record high just last month.

Analysts highlight that Donald Trump’s recent re-election has strengthened the dollar, making gold more expensive for non-dollar holders. This, coupled with persistent inflation and a robust US economy, has clouded the outlook for further rate cuts.

Despite the weekly slump, gold remains up by 25 per cent year-to-date. Analysts attribute this to earlier rate-cut optimism, record central bank purchases, and heightened geopolitical risks. However, the metal’s short-term prospects are less certain.

US Fed Chair Jerome Powell’s cautious stance on rate cuts has further dampened market sentiment. Powell cited steady economic growth, a strong labour market, and persistent inflation as reasons for limiting rate reductions. Market odds for a December rate cut have now dropped to 59 per cent, down from 83 per cent just a day earlier.

“Trump’s victory in the US Presidential election is being perceived as a headwind for gold as most of Trump’s policies are believed to have the potential to revive inflationary pressures. Under Trump’s administration, market participants see a risk of fewer Fed rate cuts than originally anticipated,” Valecha added.

Gold’s near-term trajectory will depend on upcoming US retail sales data and Federal Reserve commentary. Analysts believe gold could rebound in the coming weeks, potentially retesting the $2,600 level. For now, though, the market remains under pressure.

Silver and platinum have also seen declines, with silver trading at $30.52 per ounce. While some analysts suggest gold may regain its haven appeal amid potential political and economic turbulence, the metal faces immediate challenges.