Dubai gold drops after record rally, following biggest global slide in decades

Dubai: Gold prices in Dubai pulled back on Saturday after a record January rally, tracking a sharp global sell-off that knocked bullion below $5,000 an ounce and rattled the broader metals market. (Check latest UAE gold prices here, alongside prices in Saudi Arabia, Oman, Qatar, Bahrain, Kuwait, and India.)

By 3.50pm, Dubai’s 24-karat rate stood at Dh589.50 a gram, while 22-karat traded at Dh545.75, both lower on the day and well off the late-month peak, according to local price trackers. 

The retreat followed an abrupt reversal in global trading after former US President Donald Trump nominated Kevin Warsh to succeed Jerome Powell as chair of the Federal Reserve, a development that strengthened the dollar and cooled demand for dollar-priced bullion. 

Dubai prices captured the market’s mood swings through January. The month began with 24K at Dh519.25 on January 2 and then climbed steadily through mid-month, moving into the Dh550s before pushing into the Dh590s by January 22. 

Momentum accelerated into the final week. The 24K rate surged to Dh611.50 on January 27, jumped again to Dh639.25 on January 28, then turned abruptly. By January 30, 24K had slipped to Dh594.00, marking the steepest one-day fall of the month, before easing further to Dh589.50 on January 31. 

Even after the pullback, the month still closed higher than it started, leaving buyers with a gain of roughly Dh70 per gram from January 2 levels, highlighting how quickly sentiment has swung from chase to caution. 

Internationally, gold’s drop below $5,000 was tied to a repricing of US monetary policy expectations after Warsh’s nomination revived bets on a tougher inflation stance and a firmer dollar path. 

Market commentary also pointed to positioning and derivatives as amplifiers. Options activity has been a major driver through the rally, and the unwind accelerated the reversal once key price levels broke, with dealers forced to rebalance hedges into a falling market.

The late-month turbulence arrived after weeks of extreme moves across precious metals, fuelled by demand for perceived havens amid macro and political uncertainty.

Investor demand from China has also been a prominent feature of the rally. Earlier in January, the Shanghai Futures Exchange moved to cool sharp price gains by raising margin requirements and widening price limits across metals including gold and silver, a signal that officials were watching speculative heat build. 

That backdrop matters for Dubai buyers because it helps explain why daily price moves have become unusually large. Rapid inflows can lift prices quickly, while any shift in the dollar, rates outlook, or risk appetite can trigger equally fast reversals.

Local prices typically follow the global spot market, with the dollar’s direction and expectations for US interest rates remaining key drivers. A stronger dollar often weighs on bullion, while any renewed flight to safety can support demand again. 

- With inputs from Bloomberg.