Dubai gold surges to one-month high as geopolitical tensions grip markets

Dubai: Gold buyers in Dubai woke up to the highest prices in a month on Tuesday morning, with the 24-karat rate climbing to Dh646.50 per gram at 9.24am, up from Dh641 a day earlier, while 22-karat rose to Dh598.75 from Dh593.50.

The move extends a steady upward climb that has reshaped the local bullion market over the past four weeks and places retail buyers back in a high-price environment driven by global uncertainty and surging crude oil prices.

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One month, one clear trend

Early February began on a softer note, with 24-karat trading at Dh564.25 on February 2. Prices then moved unevenly through mid-month, dipping below Dh600 on several sessions before regaining momentum. By February 17, the rate had climbed to Dh590.75, and by February 20 it stood at Dh611.50. Gains accelerated in the final stretch of the month, touching Dh636 on March 1 and holding at Dh641 on March 2 before Tuesday’s spike to Dh646.50.

The 22-karat category mirrored that trajectory, rising from Dh522.50 on February 2 to Dh598.75 on March 3, reflecting a sharp increase in retail costs within a single month.

Global bullion prices have rallied for a fifth straight session, climbing above $5,300 an ounce and at one point approaching $5,420 in Asian trading. The advance follows an escalation in hostilities between the United States and Iran, renewed strikes across the region and attacks targeting oil and gas infrastructure, including threats to shipping in the Strait of Hormuz.

Rania Gule, Senior Market Analyst at XS.com MENA, said the current rally reflects a deeper shift in investor positioning.

“The gold market is experiencing an exceptional surge, with prices breaking through the $5,300 per ounce level and approaching $5,375 in early Asian trading, following a previous jump to around $5,420. In my view, these moves are not merely a passing speculative wave but reflect a comprehensive repricing of geopolitical risks in light of the escalating tensions between the United States and Iran, with the potential for the conflict in the Middle East to broaden. When gold breaks historical highs in a short period, the key message the market sends is that precautionary demand outweighs all other considerations, including yield assessments and opportunity costs.”

Energy markets have reacted sharply, reviving inflation concerns in the United States. Higher oil prices have pushed Treasury yields higher and complicated expectations around Federal Reserve rate cuts, with traders now pricing in easing later than previously anticipated.

Gule said the mix of war risk and inflation anxiety is reinforcing bullion’s appeal even in a higher-rate environment.

Volatility likely, bias remains higher

Staying above the $5,300 level, she added, signals strong buying interest and the emergence of a new support zone.

“If inflows into gold funds and institutional hedges continue, we may see a retest of $5,450–$5,475 in the near term. Nevertheless, I caution against short-term over-optimism; fear-driven markets can reverse sharply if signs of sudden easing appear. Therefore, I expect high volatility in the coming sessions, with a general upward bias as long as political conditions remain largely unchanged.”

Retail buyers in Dubai now face a market that has gained nearly a quarter this year, supported by persistent geopolitical tensions, concerns about inflation and broader shifts away from bonds and currencies. Jewellery shoppers may delay purchases in the hope of pullbacks, while investors view dips as opportunities to add to holdings.

“Crucially, gold is no longer moving only as a traditional hedge but as a mirror of the global financial system’s state. In an environment where geopolitical risks intersect with inflationary pressures and monetary policy complexities, gold becomes a tool for reallocating risk within investment portfolios.”

Any rapid de-escalation could trim the risk premium and trigger profit-taking below $5,200 an ounce, she said, though fresh buyers are likely to emerge amid lingering uncertainty.

“In this opaque environment, gold, in my opinion, remains the clearest compass for gauging global market anxiety.”

- With inputs from Bloomberg.