Gold swings sharply as war tensions and strong dollar rattle markets

Dubai: Gold prices in Dubai rose on Friday morning after several days of volatile trading, though the metal remains below the record levels reached earlier this month amid global market uncertainty.

At 9.15 am on Friday, the price of 24-karat gold in Dubai stood at Dh618 per gram, up from Dh611.50 on Thursday. The 22-karat variety rose to Dh572.25 from Dh566.25 a day earlier. (Check latest UAE gold prices here, alongside prices in Saudi Arabia, Oman, Qatar, Bahrain, Kuwait, and India.)

The modest rebound follows a week of sharp swings in global bullion markets. Despite Friday’s gains, gold remains on track for its first weekly decline in more than a month.

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Dubai prices mirror global volatility

Local gold prices in Dubai have closely tracked global market swings throughout February and early March.

Prices started in February near Dh585 per gram, then gradually moved above Dh600 in the middle of the month as international bullion markets strengthened.

Momentum accelerated toward the end of February, with prices rising above Dh629 before climbing further in the final days of the month.

The rally reached its peak at the start of March when 24-karat gold briefly touched Dh641 per gram while 22-karat gold approached Dh593.50.

Prices then retreated as global markets reacted to rising bond yields and a stronger US dollar.

Trading during the past week has remained volatile, with prices moving between Dh611 and Dh619 before Friday’s modest rebound.

Global markets drive bullion swings

Heightened geopolitical tensions have supported demand for safe-haven assets, while a stronger US dollar and rising bond yields have weighed on prices.

During global trading, bullion rose as much as 1.2% and briefly climbed above $5,100 an ounce. Even with that move, prices are heading toward a weekly loss of nearly 3%.

The US currency has strengthened notably during the past week. A gauge tracking the dollar has climbed about 1.3%, marking its strongest weekly gain since November 2024. US Treasury yields have also moved higher, reaching their highest levels in several weeks.

A stronger dollar and higher borrowing costs usually pressure gold because the metal does not provide interest.

Expectations around US interest rate cuts have also shifted rapidly. Traders in swaps markets now anticipate around 34 basis points of Federal Reserve rate cuts by the end of the year, down from roughly 60 basis points expected just a week earlier.

War tensions fuel market uncertainty

Global markets have remained on edge as the conflict involving the US, Israel, and Iran enters its seventh day.

Iran launched missiles and drone attacks across parts of the Gulf region on Thursday evening, striking an oil refinery in Bahrain. Israel continued air operations targeting Tehran while the United States suspended operations at its embassy in Kuwait.

The conflict has pushed energy markets sharply higher. Oil prices are heading toward their biggest weekly gain since 2022 amid concerns over supply disruptions.

Attacks on energy infrastructure across the region and mounting tensions around the Strait of Hormuz have intensified fears about the stability of global oil supplies. The waterway, which handles a large share of the world’s oil shipments, has effectively been closed to shipping following the latest escalation.

Gold remains strong this year

Despite the recent pullback, bullion continues to post strong gains in 2026.

Gold prices have risen close to 20% since the start of the year, supported by geopolitical instability, volatile energy markets and uncertainty around global trade policy.

Policy shifts in Washington have also played a role. US President Donald Trump’s approach to global trade and geopolitics, along with concerns about the Federal Reserve's independence, have prompted investors to increase exposure to safe-haven assets.

Liquidity pressures add volatility

Recent swings in global equity markets have also influenced gold’s performance.

Sharp declines in stock markets this week prompted some investors to sell gold to raise cash, exposing bullion to broader market movements despite its traditional role as a defensive asset.

Concerns about potential central bank sales have added another layer of uncertainty.

Poland’s central bank, which has been one of the world’s most active buyers of gold in recent years, is exploring a proposal to sell part of its reserves.

Other precious metals also recorded gains during the latest session.

Silver climbed about 1.9% to $83.80 an ounce, recovering from the previous day’s losses. Platinum and palladium also advanced during global trading.

- With inputs from Bloomberg.