Gold prices in the UAE have stabilised below the Dh500 mark for a second consecutive day following a significant post-Diwali drop. In Dubai, 24-karat gold was priced at Dh495.50 per gram ahead of the weekend, while 22-karat gold was trading at Dh458.75, holding steady after a volatile session that saw prices dip as low as Dh490 and Dh454, respectively.
Local Demand Remains Steady
Jewellery retailers report that consumer demand has remained consistent as buyers adjust to the new price levels following the recent correction. The easing of prices marks a turning point for UAE shoppers after months of record-breaking highs. Many in the industry now expect pent-up demand to lift sales in the coming weeks, particularly if the benchmark 24-karat price remains below the Dh500 threshold.
Global Factors Driving the Correction
The local stability mirrors global trends, where gold prices were largely unchanged after falling nearly 6% over the previous two sessions. The sharp pullback has led investors to question whether the rally that pushed gold to historic levels had gone too far. This shift in sentiment is partly driven by renewed optimism over a potential US-China trade deal, which could ease geopolitical tensions and reduce the appeal of traditional safe-haven assets.
The “debasement trade,” where investors hedge against widening fiscal deficits by moving away from sovereign debt, has been a key driver of gold’s rally since mid-August. Even after this week’s correction, the precious metal remains about 55% higher this year. The recent sell-off also coincided with a sharp outflow from gold-backed exchange-traded funds, which recorded their biggest single-day decline in five months.
Expert Analysis on Gold’s Future
According to Carsten Menke, Head of Next Generation Research at Julius Baer, the latest decline should be viewed in perspective. “Gold remained most resilient, relatively speaking, even though such a steep sell-off is rather unusual,” he said, adding that a short-term consolidation is more likely than a long-term correction. “A consolidation would in fact not be unusual after such a sharp and steep rally and should be considered healthy.”
Menke stated that the underlying picture for the precious metal remains positive. “The fundamental backdrop for gold remains favourable. It benefits from a strong mix of safe-haven demand and central bank buying, paired with the outlook for lower US interest rates and a weaker US dollar,” he explained. He noted that central bank demand is already a “structural factor” as emerging market nations seek to diversify away from the US dollar and reduce their vulnerability to sanctions.
For consumers in the UAE, the current price drop offers a welcome buying opportunity. However, with strong fundamental support for gold on the global stage, the current stability may represent a temporary window rather than the beginning of a sustained downturn.
