Gold prices in Dubai remain below 500 dirhams for the second consecutive week

According to data from the World Gold Council, demand for gold jewelry in the United Arab Emirates (UAE) decreased by 28% year-on-year, reaching 5.6 tonnes in the second quarter of 2026 compared to 7.7 tonnes in the same period last year. This decline was attributed to the impact of regional geopolitical tensions and a decrease in tourist numbers.

Nevertheless, demand for gold jewelry in the UAE showed a quarterly growth of 21.7%. This was driven by the influence of record high precious metal prices observed in January.

The historical high price for the precious metal reached $5,589.38 per ounce on January 28, 2026. On that day, the price of gold jumped by more than $300 during the trading session, largely caused by escalating tensions between the US and Iran, as the US threatened a major strike against the country.

In contrast to jewelry, demand for gold bars and coins continued to rise. For the second quarter of 2026, demand for bars and coins increased by 30% year-on-year, reaching 5.3 tonnes, compared to 4.1% the previous year. Furthermore, according to the World Gold Council, the quarterly demand for gold coins and bars in the UAE grew by 32.5%.

Gold coins and bars remain a preferred investment instrument in the UAE due to a combination of cultural and financial factors. For expatriates from South Asia, Arabs, and other communities, gold is traditionally viewed as a value passed down through generations, closely linked to wedding traditions, festivals, and family savings.

From a financial perspective, gold coins and bars serve as a hedge against inflation and currency fluctuations, especially during periods of geopolitical uncertainty or stock market downturns. Many residents prefer physical gold over paper investments such as ETFs because it provides direct ownership, portability, and liquidity, allowing it to be relatively easily sold or used as collateral.

The precious metal price began to decline after the start of the Middle East war, as rising oil prices raised concerns about inflation in the US economy. On Monday evening, spot gold traded at $4,026 per ounce, which was 1.24% lower. In the UAE, 24K and 22K gold prices opened at AED 488.25 and AED 452.0 per gram, respectively.

Simon-Peter Massabni, Head of Business Development at xs.com, noted that the fundamental prospects for gold will be closely tied to the trajectory of inflation, US monetary policy, the direction of the dollar, and real bond yields. He believes that the long-term and medium-term forecast remains inclined towards a continuation of the upward trend for gold, although he anticipates strong corrective waves.

Massabni stated that new historical highs cannot be ruled out if current supportive fundamentals persist. He believes that the greater danger for investors may lie in underestimating the strength of the overall upward trend due to short-term corrections. At the same time, he sees little reason to chase gold growth with every rally. The best approach, in his opinion, is to wait for consolidation zones and re-entry, using technical levels to determine potential opportunities and effectively manage risks.

He added that gold is entering a turning point that could define the market's trajectory in the coming years. If the current movement proves to be merely a correction within a longer bull market, today's prices could ultimately be seen as a period of accumulation before another major surge. However, if gold successfully breaks key resistance levels and establishes stable trading above previous highs, a transition can be observed from a rally driven mainly by fear and hedging to a new phase characterized by a global revaluation of gold itself. Therefore, he does not believe that the history of gold ended after the last correction; rather, he sees it as an asset that still possesses strong structural drivers for further growth, provided there is disciplined risk management and confirmation of technical signals when navigating the next market phase.

According to data from the World Gold Council, demand for gold jewelry is likely to remain under pressure throughout the second half of this year. Meanwhile, geopolitical uncertainty, inflation concerns, and limited alternative investment options will continue to support demand for bullion and coins.

Decline in Jewelry Demand

The report on gold demand trends for the second quarter of 2026 noted that the volume of demand for jewelry reached its lowest quarterly figure since the pandemic—278 tonnes. This was due to high gold prices and general inflationary pressure, which restricted purchasing power. Nevertheless, spending on gold jewelry grew by 14% year-on-year, reaching $40 billion.

In Middle Eastern countries, jewelry demand remained weak in the second quarter due to high prices affecting affordability. Despite regional geopolitical turmoil, some growth was ensured by prices that were lower than previous peaks. Saudi Arabia showed itself to be one of the strongest participants in the region, demonstrating an 8% year-on-year decrease. In the UAE, the market recorded its fourteenth consecutive quarterly year-on-year decline, becoming one of the few markets where a drop in demand in US dollars was observed.

Market activity in the UAE was pressured by a decrease in tourist flow, as the country's economy is heavily dependent on tourists in the jewelry sector, and the conflict between the US and Iran negatively impacted activity. The market received some support due to lower prices and demand from Indian expatriates, which is likely to increase in the remainder of the year due to increased Indian import duties, giving the region a price advantage.

Strong Investment Demand

While jewelry demand remained weak, investment demand in the region proved more resilient. The World Gold Council noted that geopolitical instability continues to stimulate the purchase of safe-haven assets, and the correction in gold prices in the second half of the quarter contributed to the search for favorable deals. Investments in bullion and coins in the UAE increased by 30% year-on-year in the second quarter. This growth was driven by both demand for safe assets and higher Indian import duties, making the purchase of gold in the UAE relatively more attractive.

Across the Middle East, investment demand remained steady despite some slowdown compared to the exceptionally high figures at the beginning of the year. Globally, total gold demand, including over-the-counter (OTC) investments, remained unchanged year-on-year at 1269 tonnes in the second quarter. Thus, demand for the first half totaled 2522 tonnes, which is 2% more than the previous year. However, the value of this demand reached a record $380 billion due to rising prices.