Gold prices in UAE hit fresh high of Dh523 before dropping back down

Dubai: Gold prices in the UAE started the day by extending their record-breaking weekly rally, but dropped back down by nearly Dh11 later in the day amid renewed volatility.

By Friday evening, 24-karat gold cost Dh512.25 per gram, while 22-karat reached Dh474.25. The prices opened the day at a new record high of Dh523 and Dh485.

(Check latest UAE gold prices here, alongside prices in Saudi Arabia, Oman, Qatar, Bahrain, Kuwait, and India.)

The metal has gained nearly 5% since Monday, supported by strong safe-haven inflows, renewed geopolitical friction and growing market conviction that the US Federal Reserve will continue cutting rates.

The costliest Diwali on record

This year’s Diwali has become the most expensive festive season for gold buyers in the UAE. Jewellery retailers told Gulf News that the surge has forced shoppers to rethink their budgets. Many are choosing lighter designs, smaller coins, and everyday wear pieces instead of heavy sets. Some customers have postponed purchases altogether, hoping for a correction after the festive period.

Trade tensions and rate bets fuel rally

Analysts say the latest surge reflects a convergence of global headwinds. Rising US–China tensions, an ongoing US government shutdown, and investor expectations of further Fed easing have amplified gold’s allure as a haven. The metal hit $4,250 an ounce on Friday, while silver climbed more than 3% amid tight supply in the London market.

Markets are increasingly confident that the Fed will cut rates again this month, with Chair Jerome Powell signalling a 25 basis-point reduction is on track. Meanwhile, President Donald Trump’s renewed trade war stance and Treasury Secretary Scott Bessent’s suggestion to slow tariff hikes have added to volatility, prompting investors to move away from risk assets.

Why lower rates boost gold demand

Interest rate cuts reduce the opportunity cost of holding gold. With bonds and cash yielding less, investors turn to non-yielding assets that preserve value. Traders are now pricing in a 97% probability of a 25-basis-point cut in October, a setup that remains decisively bullish for bullion.

Adding momentum is what markets call the debasement trade, a move away from sovereign debt and fiat currencies toward hard assets like gold amid concerns over growing fiscal deficits. Central banks continue to buy gold steadily, reinforcing the structural demand underpinning its multi-month climb.

Global momentum builds

On the global stage, spot gold breached $4,300 per ounce in intraday trade this week. HSBC has raised its 2025 and 2026 price forecasts, citing persistent safe-haven demand, macro uncertainty, and strong official-sector buying.