Gold prices in the UAE remain stable, with 22-karat gold trading below 500 dirhams per gram

Gold prices showed a decline on Monday morning as investors awaited comments from the Chairman of the US Federal Reserve before the September meeting.

The 24K option opened trading at Dh533, which is lower than the Dh536.75 recorded on Friday. Over the past week, the yellow metal lost about Dh25 after reaching a three-month high. Among other varieties, such as 22K, 21K, 18K, and 14K, prices also decreased: Dh5493.75, Dh473.25, Dh405.75, and Dh316.50, respectively.

Globally, spot gold prices fell by 0.14 percent to $4,424.3 per ounce, while silver traded at $66.4 per ounce, showing an increase of 1.13 percent.

Analysts note that the recent rise in gold prices, which reached a three-month high of around Dh4,700 last week, has several aspects. Ole Hansen, Head of Commodity Strategy at Saxo Bank, stated that one of the factors is the renewed concern over the fiscal sustainability of the US and the dollar following the Treasury's decision to expand the repurchase of long-term government bonds. He emphasized that the signal itself was more significant than the actual volume of these operations.

Hansen explained that this contributed to the resurgence of the devaluation narrative, which supported gold for most of the last two years. He added that gold is performing strongly despite higher bond yields and inflation remaining significantly above the Federal Reserve's target level. According to him, besides constant demand from central banks, this indicates that investors are increasingly distinguishing between high yields caused by monetary policy tightening and high yields reflecting concerns about fiscal sustainability and government borrowing needs.

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.

Gold prices in Dubai continued to rise on Thursday morning, showing an increase of 17.5 dirhams over the past week. The rise was driven by the decrease in US Treasury bond yields from multi-year highs and the maintenance of the US dollar at multi-month lows.

The price of 24K gold traded at 541 dirhams per ounce, which is higher than on Wednesday's market and 15 dirhams compared to Tuesday's closing. Other varieties of yellow metal—22K, 21K, 18K, and 14K—also showed growth, reaching 501, 480.5, 411.75, and 321.25 dirhams, respectively.

On the global spot gold market, there was a growth of 0.09 percent, with the price standing at $4491.47 per ounce. Silver rose by 2.16 percent and traded at $67.14 per ounce.

Analysts note that both gold and silver are attempting to recover after a sharp sell-off that occurred on Tuesday. This process is supported by falling treasury yields and dollar weakness.

Since the UAE dirham is pegged to the US dollar, the monetary policy of the UAE directly depends on US Treasury yields. Vijay Valecha, Investment Director at Century Financial, explained that softer US economic data lowered expectations for further tightening by the Fed, and markets are now focused on the FOMC meeting protocols in July and upcoming Jackson Hole statements for additional policy signals.

He added that lower rates and a weaker dollar remain favorable factors for precious metals, although rising oil prices and fiscal issues may sustain high volatility. Valecha believes that both metals maintain a short-to-medium term bullish bias, supported by falling rates, dollar weakness, and the expectation of less restrictive Fed policy. Meanwhile, support levels of $4323 for gold and $62.65 for silver remain critical for holding.

From a technical perspective, gold remains constructive after maintaining the support level at $4323 and is now trying to regain momentum above the $4360 mark. The next significant resistance level is $4435. The analyst noted that a breakthrough above this level could strengthen the bullish structure and open the way to the $4450–$4500 zone. On the other hand, $4323 remains a key support, followed by $4227. As long as gold holds above $4323, the recent decline can be viewed as a correction within a broader uptrend.