Gold prices in Dubai dropped by 9.5 dirhams per gram ahead of Diwali festival

Gold prices in Dubai showed a decline on Wednesday morning, as the 24-karat version of the precious metal lost 2.5 dirhams this week and 10.75 dirhams over the last month, which provided relief for investors shortly before the Diwali festival.

At the opening of markets on Wednesday, 24K gold traded at 486.5 dirhams per gram, lower than the 489 dirhams recorded at the close of markets on Tuesday. Other varieties of yellow metal—22K, 21K, 18K, and 14K—traded at prices of 450.5, 432, 370.25, and 288.75 dirhams per gram, respectively.

Globally, the spot price of gold dropped by 0.66 percent, reaching $4034.46 per ounce according to UAE time at 9:40 AM. Silver also decreased by 0.98 percent, trading at $53.92 per ounce.

Ross Maxwell, Strategy Director at VT Markets, noted that demand for yellow metal continues to be supported by structural demand, including central bank purchases and geopolitical uncertainty.

Maxwell explained that the upcoming US midterm elections in November could create a more favorable environment if expectations of reduced fiscal expansion lead to lower yields and a weakening of the US dollar. He stated that this could strengthen gold's prospects beyond temporary demand for capital preservation around election day.

Nevertheless, he added that persistent inflation and tight Federal Reserve policy could keep real yields high, limiting gold's recovery. Maxwell believes that a more convincing bullish signal will appear if gold establishes higher highs while real Treasury yields and the DXY index decline simultaneously.

In Maxwell's view, the US midterm elections on November 3rd could be a significant catalyst for financial markets, as investors will assess how a potential shift in Congressional control will affect fiscal policy, inflation, and interest rates. However, the biggest market reaction may depend not on which party wins, but on how closely the result aligns with what investors already expected.

Gold prices in Dubai showed a recovery on Monday morning, following a decline of more than 20 dirhams per gram throughout October.

According to data from Dubai Jewellery Group, the price of 24-karat gold on Monday morning was 484.0 dirhams per gram, which is higher than the figure of 481.5 dirhams per gram recorded at the close of trading over the weekend. In early October, the 24K option traded at approximately 500 dirhams per gram.

Similarly, other varieties also opened with an increase at the beginning of the week: 22K, 21K, and 18K gold traded at prices of 448.25, 429.75, and 368.25 dirhams per gram, respectively. The most affordable option, 14K, continued to trade below 300 dirhams per gram on Monday, reaching the mark of 287.25 dirhams.

Spot gold rose by 0.38 percent, reaching $4013.86 per ounce. Silver traded at $199.26 per ounce, increasing by 0.28 percent.

Naeem Aslam, Director of Investments at Zaye Capital Markets, noted that gold is struggling to attract stable demand as a safe-haven asset despite escalating geopolitical uncertainty. He pointed out that President Donald Trump's statement that the United States is not negotiating with Iran, as well as his warning about possible imminent developments, heightened concerns about further military confrontation and energy supply disruptions.

Aslam added: 'The immediate problem for gold is that geopolitical tension generates competing market forces. Although conflict escalation usually prompts investors to seek shelter in bullion, rising oil prices can intensify inflationary expectations and increase the likelihood of maintaining high interest rates. This raises the opportunity cost of holding gold and makes the psychological support level of $4000 particularly important.'

On Monday morning, oil prices showed a downward trend after a strong rise last week. WTI and Brent crude oil traded at prices of $101 and $114.5 per barrel, respectively, falling by 2.18 percent and 1.89 percent.

Gold prices in Dubai have fallen for the fifth consecutive day, reaching below the two-month low. The reason for this decline is attributed to higher oil prices, which have intensified concerns about an interest rate hike by the US Federal Reserve.

On Friday, the price of 24-karat gold opened at Dh482.75 per gram, lower than Dh485.75 per gram when trading closed on Thursday, showing a drop of Dh3 per gram. Among other precious metal varieties, such as 22K, 21K, and 18K, prices decreased to Dh447.0, Dh428.5, and Dh367.5 per gram, respectively.

The spot gold rate fell by 0.8 percent to $4,011 per ounce, while silver lost 1.8 percent, dropping to $198.

The recent decrease in gold prices is a welcome relief for gold and jewelry buyers in the UAE ahead of the Diwali festival, which is considered one of the most auspicious times for purchasing precious metals. Lower prices make gold jewelry, coins, and bars more affordable, allowing households to purchase more items within their budget or choose more substantial pieces without a significant increase in costs.

The price drop may also encourage buyers who postponed purchases during the recent market rise to return to the market, thereby supporting retail sales during the festive season.

Ranim Turfa, Head of Research and Market Analysis for Mena at Tickmill, noted that gold has slightly decreased because the rise in oil prices has once again raised inflation concerns and strengthened expectations of tight monetary policy ahead of the Federal Reserve meeting next week.

Turfa stated: 'Increased tension in the Middle East may support crude oil prices, maintaining pressure on the Fed to maintain a hawkish stance. Although it is widely expected that the Fed will keep rates unchanged in October, markets continue to price in a rate hike in December, and expectations of further tightening in 2027 could add headwinds for gold. Whether these hikes materialize this year or next will likely remain a key factor in sentiment towards this metal.'

Dylan U, Research Strategist at Pepperstone, suggested that gold is under pressure due to expectations of prolonged high rates and a general reduction in market debt load. He added: 'Instead of attracting demand as a safe haven, the sharp sell-off in US stocks may have prompted some investors to liquidate gold positions to cover losses or meet margin calls elsewhere.'