Gold buyers in the UAE are seeing a significant drop in prices after weeks of record highs. On Tuesday, the price of gold plummeted by nearly Dh30 per gram, following a global sell-off that erased approximately 6% of its value in a single day. This sharp decline marks the steepest drop since 2013, providing much-needed relief to consumers who have been grappling with soaring gold prices.
In Dubai, 24-karat gold fell below Dh500, trading at Dh495 per gram, while 22-karat gold dropped to Dh458. Earlier that day, the prices had peaked at Dh525.25 for 24K and Dh486 for 22K, mirroring the high levels seen on Monday. Globally, spot gold also saw a notable decrease, dropping as much as 6.3% to $4,082 an ounce. Silver followed suit, losing 8.7% in value. This decline was attributed to improving trade relations between the US and China and a strengthening US dollar, which has reduced the demand for precious metals as safe-haven assets.
Factors Behind the Drop in Gold Prices
The correction in gold prices has been anticipated by analysts, who suggest that the rapid surge in gold prices was unsustainable. Daniela Hathorn, a senior market analyst at Capital.com, explained that gold and silver’s rally was largely driven by “safe-haven demand” amid months of geopolitical tensions and expectations of falling interest rates. However, with improving trade relations between the US and China, the momentum has slowed, leading to a natural pullback in the market.
Fawad Razaqzada of City Index further noted that while this drop may seem drastic, it does not signal the end of gold’s broader uptrend. “Markets rarely move in straight lines,” he remarked. “Corrections are natural, and many investors who missed the rally may now seize the opportunity to buy at lower prices.”
Impact on UAE Buyers
For residents in the UAE, this price dip could provide a much-needed correction after months of near-record highs that saw 24K gold prices surpass Dh520 per gram. Analysts predict that gold prices may continue to soften in the coming days, as traders take profits and global demand cools. This shift in market sentiment may offer UAE buyers a chance to purchase gold at more affordable levels.
However, Matt Maley of Miller Tabak cautioned that volatility is likely to remain high. “Experience tells us that wild price swings after a major rally often signal a material pullback,” he said. “It doesn’t necessarily mean the bull market is over, but volatility tends to rise sharply.”
Long-Term Outlook for Gold
Despite the recent sell-off, the long-term outlook for gold remains strong. Analysts point to persistent inflation and the expectation that the US Federal Reserve will continue to cut interest rates in 2026 as factors that will provide ongoing support for gold prices. In the short term, buyers in the UAE may see prices dip further below Dh495 per gram, especially if global spot gold remains under pressure. However, any significant drop is likely to be temporary, as gold’s fundamental value is expected to hold steady.
As gold prices continue to fluctuate, UAE buyers may find an opportunity to purchase at lower levels, but they should remain aware that market volatility could lead to further price swings in the near future. For now, Dubai shoppers can find some relief, with gold prices finally pulling back from their record-setting highs.
