Gold prices in Dubai are climbing again. What’s driving the surge

Dubai: Gold prices in Dubai are once again brushing against record territory, testing the patience and budgets of jewellery buyers while reinforcing the appeal of bullion for long-term investors. Local retail rates firmed this week in step with global markets, with 24-karat gold trading at Dh522.25 per gram and 22-karat at Dh483.50, levels that place both just shy of their all-time highs.

The steady climb reflects a broader rally across precious metals, supported by softer-than-expected US inflation data, expectations of further interest-rate cuts and renewed geopolitical risks. For consumers in the UAE, the move means gold shopping ahead of year-end festivities and weddings is becoming progressively more expensive, even as price momentum shows few signs of fading.

A steady climb through December

Dubai’s gold market has followed a clear upward trajectory through December, with only brief pauses along the way. The month began with relatively elevated levels, before prices dipped early on as 24-karat briefly slipped below Dh504 per gram and 22-karat eased to around Dh466.50. That softness proved short-lived.

By the first week of December, prices had stabilised in a narrow range, holding just above Dh505 for 24-karat and near Dh468 for 22-karat. Momentum began to build from the second week, with gold pushing decisively higher as global cues turned more supportive. By December 10, 24-karat had crossed Dh506 and quickly accelerated, breaking above Dh515 within days. The rally gathered pace into mid-month, lifting 24-karat beyond Dh518 and 22-karat to Dh480.

Over the past several sessions, prices have consolidated at elevated levels. After briefly touching Dh523.25 for 24-karat and Dh484.75 for 22-karat, the market settled back slightly but remained firm, with current rates still among the highest seen this year. The pattern points to sustained buying interest rather than speculative spikes.

Global cues remain supportive

Internationally, gold and silver are hovering close to record levels after US inflation data reinforced expectations of easier monetary policy. Spot gold is trading near $4,330 an ounce and is on track for a second consecutive weekly gain. Core US inflation rose at its slowest pace since early 2021, strengthening the case for lower borrowing costs, a positive backdrop for non-yielding assets such as gold.

That data, however, comes with caveats. A record six-week US government shutdown that ended last month has distorted some economic indicators, complicating the Federal Reserve’s outlook. While the Fed delivered its third straight rate cut last week, policymakers have been deliberately vague about the pace of further easing. Market pricing suggests roughly a one-in-four chance of another cut in January, even as US President Donald Trump has continued to press for more aggressive reductions next year.

Lower interest rates typically reduce the opportunity cost of holding gold, making it more attractive relative to bonds and cash. This dynamic has been a key driver of the metal’s strength in recent months.

Geopolitics adds to haven demand

Geopolitical tensions are also reinforcing gold’s role as a safe-haven asset. This week’s rally has drawn support from escalating developments involving Venezuela, where the US has ordered a blockade of sanctioned oil tankers as pressure mounts on Caracas. The move comes alongside a visible buildup of American military presence in the region, adding another layer of uncertainty to already fragile global conditions.

Such risks tend to underpin demand for gold, particularly among institutional investors and central banks seeking to diversify reserves away from traditional currencies.

A historic year for precious metals

The current price levels cap what has already been a remarkable year for precious metals. Both gold and silver are heading for their strongest annual performances since 1979. Gold prices have risen by roughly two-thirds since the start of the year, while silver has more than doubled.

Central-bank buying has been a crucial pillar of this rally, alongside steady inflows into bullion-backed exchange-traded funds. Platinum, meanwhile, is trading near a 17-year high, reflecting broader strength across the metals complex.

What it means for UAE consumers

For buyers in Dubai, the message is mixed. Those who purchased earlier in the year are sitting on solid gains, while late entrants face the prospect of paying near-peak prices. With year-end demand traditionally strong and global drivers still supportive, any meaningful pullback may prove limited in the near term.

At the same time, elevated prices increase sensitivity to short-term swings, making timing and budgeting more critical for jewellery buyers. As long as rate-cut expectations, central-bank demand and geopolitical risks remain in play, gold’s grip on high levels looks set to continue, keeping Dubai prices uncomfortably close to record territory for shoppers.

- With inputs from agencies.