Gold prices have dropped in the UAE over the past week, with 22K slipping below Dh500 per gram in Dubai as the precious metal traded below $4,500 an ounce over the weekend.
This brings good news for UAE gold jewellery shoppers ahead of the key Indian festivals of Diwali and Navratri.
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On Sunday, 24K and 22K gold prices closed at Dh536.75 and Dh497 per gram, falling Dh23.25 and Dh21.5 per gram, respectively, since this week’s peak hit on August 25.
Among the other variants, 21K, 18K and 14K slipped to Dh476.75, Dh408.5 and Dh318.75 per gram, respectively.
Spot gold was trading at $4,455.43 per ounce, down 0.49 per cent.
But will gold prices in Dubai and globally lose further ground in the coming week?
Rania Gule, senior market analyst for Mena at xs.com, said she does not view the current pullback below the $4,600 level as a shift in the broader trend at this stage, but rather as a natural corrective move driven by profit-taking after a strong upward rally.
“The key question for investors and traders is not whether gold has pulled back, but whether this decline marks the beginning of a deeper bearish reversal or simply a temporary pause before the uptrend resumes. From a fundamental perspective, the environment remains supportive for gold, although the market has become increasingly sensitive to expectations surrounding US monetary policy,” she said.
Gule added that elevated inflation, combined with continued uncertainty over economic growth, fiscal conditions, and bond markets, is making the US Federal Reserve’s task increasingly complicated.
Recent inflation data have highlighted persistent price pressures, with the core Personal Consumption Expenditures (PCE) price index rising to levels that require the Fed to remain cautious.
“Markets are not simply looking for the usual remarks about monitoring economic data; they want greater clarity on the future path of monetary policy, particularly whether the Federal Reserve intends to keep interest rates elevated for longer to combat inflation, or whether weaker economic activity could push policymakers toward a more accommodative stance,” added Gule.
The senior market analyst believes that any more hawkish-than-expected signal could provide temporary support to the dollar and Treasury yields, thereby increasing pressure on gold.
“Conversely, the absence of hawkish signals or the emergence of a more dovish tone could quickly revive demand for the precious metal.”
It is also important to emphasise that gold is no longer driven solely by its traditional relationship with the US dollar or real interest rates. Geopolitical and global economic uncertainty, along with concerns surrounding US debt levels and fiscal deficits, are increasingly influencing investor decisions. Therefore, even if the dollar receives temporary support from hawkish Federal Reserve commentary, gold buying could remain resilient as investors continue to use the metal as a hedge and safe-haven asset amid rising risks.
Source: Khaleej Times