Gold prices in the UAE have seen a modest increase, reflecting steady local demand amidst global market fluctuations. On Friday, 24-carat gold closed at Dh482.75 per gram, up from Dh479 the previous day. Other carat variations also saw slight gains, with 22-carat priced at Dh447, 21-carat at Dh428.50, and 18-carat at Dh367.50. These movements occurred despite a broader retracement in global gold prices from record highs earlier in the month.
Internationally, gold had surged to a historic high of around $4,300 per ounce but recently dipped to approximately $4,050, marking a decline of 5.8%. This retreat has raised questions among some investors, but analysts view it as a typical correction following an overheated market. The Relative Strength Index (RSI), a widely used momentum indicator, had reached an extreme level of 92 during the rally, far above the 70 threshold typically seen as overbought, signalling that a pullback was imminent.
Market analysts, including Alex Kuptsikevich from FxPro, suggest that the correction is not yet over. He attributes the gold price surge to a mix of factors, including fears over global economic stability, potential aggressive monetary expansion by the Federal Reserve, and geopolitical tensions, especially between the US and China. However, these issues are now calming, with improved US-China relations and a less aggressive stance from central banks. This shift, according to Kuptsikevich, has led to a reduction in gold’s supporting factors.
The current market correction follows a broader trend observed in previous gold bull markets, such as in 1979 and 2011, where sharp gains were followed by consolidation phases lasting several months. These pauses are normal and do not necessarily indicate a reversal of the broader bullish trend. What makes this particular moment noteworthy is the seasonal volatility that often hits gold prices in October, a month historically marked by weakness due to institutional portfolio adjustments and risk reduction ahead of the year-end.
Gold mining stocks have been more affected than the metal itself, with equities falling between 15 and 20 percent, far steeper than the decline in gold prices. This pattern is a common feature during correction phases in commodity markets, as the leverage effect within mining stocks amplifies market movements. Larger mining companies with stronger balance sheets have fared better, while smaller exploration firms have suffered heavier losses.
In Dubai, the impact of global price fluctuations is often felt quickly due to the emirate’s role as a global gold trading hub and a major retail jewellery market. Retailers have reported steady footfall, with many shoppers seeing the dip in prices as an opportunity. Demand may rise in the coming weeks, particularly in the lead-up to the festive and wedding seasons, if prices stabilise.
While short-term volatility is expected, the long-term outlook for gold remains positive. Structural factors such as central-bank reserve diversification, high government debt in major economies, and the metal’s role as a hedge against currency devaluation continue to support its appeal. However, near-term momentum will depend on US Federal Reserve policy, inflation trends, and broader geopolitical sentiment.
Analysts suggest that gold’s recent pullback is more of a pause than a trend reversal. The market is consolidating, not collapsing, and while some short-term downside is still possible, the fundamentals supporting gold remain intact.
