Gold prices in the United Arab Emirates have been declining over the past week. In Dubai, 22-karat pure gold dropped below the 500 dirham per gram mark, and over the weekend, the precious metal traded below $4,500 per ounce.
This has been favorable news for jewelry buyers in the UAE ahead of major Indian festivals Diwali and Navratri. On Sunday, prices for 24- and 22-karat gold were 536.75 and 497 dirhams per gram, respectively, which is lower than the peak values reached on August 25. Among other options, 21, 18, and 14-karat gold fell to 476.75, 408.5, and 318.75 dirhams per gram.
The spot gold rate was $4,455.43 per ounce, reflecting a decrease of 0.49 percent. The question arises whether gold prices in Dubai and globally will lose even more value in the coming week.
Rania Ghule, Senior Market Analyst at Mena in xs.com, believes that the current drop below the $4,600 level is not an indication of a change in the overall trend at this stage, but rather a natural corrective measure caused by profit-taking after a strong upward rally. She noted that the key question for traders and investors is not the gold pullback itself, but whether it signals the beginning of a deeper bearish reversal or just a temporary pause before resuming growth.
From a fundamental perspective, conditions remain favorable for gold, but the market has become more sensitive to expectations regarding US monetary policy. Ghule added that rising inflation combined with ongoing uncertainty about economic growth, fiscal conditions, and bond markets complicates the tasks of the US Federal Reserve.
Recent inflation data has shown persistent price pressure, as the Consumer Price Index (PCE) rose to levels requiring caution from the Fed. The analyst emphasized that markets demand greater clarity regarding the future course of monetary policy, especially whether the Federal Reserve intends to maintain high interest rates longer to combat inflation, or if slowing economic activity might push policymakers toward a softer stance.
Ghule suggests that any signal harsher than expected could temporarily support the dollar and Treasury yields, thereby increasing pressure on gold. Conversely, the absence of harsh signals or the emergence of a softer tone could quickly revive demand for the precious metal. It is also important to note that gold is no longer determined solely by its traditional link to the US dollar or real interest rates. Geopolitical and global economic uncertainty, as well as concerns about US national debt levels and budget deficits, are increasingly influencing investor decisions. Consequently, even if the dollar receives temporary support due to hawkish comments from the Federal Reserve, gold purchases may remain resilient as investors continue to use this metal as a hedge and safe-haven asset amid growing risks.