UAE gold prices slip from June peak, but is now the right time to buy?

Dubai: Dubai gold prices edged higher on Tuesday morning, but they remained well below the levels seen at the start of the month, giving shoppers a small window to reassess purchases before the next move in global bullion prices. (Check live prices here.)

At 9.13am on Tuesday, 24-karat gold was priced at Dh522.25 per gram, up from Dh521.50 on Monday, while the more popular 22-karat variety stood at Dh483.50, compared with Dh482.75 a day earlier.

The modest rise still leaves local rates far below the month’s high. On June 2, 24-karat gold was priced at Dh542.50 per gram, while 22-karat stood at Dh502.25. Prices stayed elevated on June 3 and June 4, with 24-karat gold at Dh536 and Dh538.50, before easing to Dh522.50 on June 5. Since then, UAE gold rates have moved in a narrow band, with 24-karat gold hovering around Dh521.50 to Dh522.25 and 22-karat gold staying close to Dh483.

That means shoppers looking at 22-karat jewellery are seeing prices nearly Dh19 per gram lower than the June 2 peak, even after Tuesday’s small increase.

The pullback offers some relief to UAE residents planning wedding purchases, festive buying or investment-related gold accumulation, though analysts warn that the market has not fully stabilised.

Gold has come under pressure globally after a strong rally earlier in the year, with stronger US economic data reducing expectations of an early interest rate cut by the Federal Reserve. Higher interest rates usually weigh on gold because the metal does not offer yield, making cash and bonds more attractive during periods of tighter monetary policy.

Linh Tran, Market Analyst at XS.com, said in a note that gold prices remained under corrective pressure and had pulled back toward the $4,300 an ounce area, marking a decline of nearly 9% over the past month.

“This movement suggests that gold’s bullish momentum has weakened significantly after the strong rally seen earlier,” Tran said. “However, from a longer-term perspective, the current price remains well above the level seen during the same period last year, indicating that the broader uptrend has not been broken.”

The main drag on gold is coming from a recovery in the US dollar and Treasury yields, according to Tran. The dollar index has been trading around 99.7 to 99.8, while US Treasury yields are around 4.5% to 4.6%, supported by stronger-than-expected labour market data.

Nonfarm payrolls rose by 172,000 jobs, while the S&P Global flash manufacturing PMI increased to 55.3 in May. Inflation has also remained sticky, with April CPI rising 0.6% month-on-month and one-year consumer inflation expectations at 3.5%.

Those numbers have made investors more cautious about expecting a near-term Fed rate cut. The US central bank is keeping interest rates in the 3.50% to 3.75% range, and a resilient economy gives policymakers room to hold rates higher for longer.

Tran said this increases the opportunity cost of holding gold and weighs on the precious metal in the short term.

Investor flows have also turned more selective. Global gold ETFs recorded around $2 billion in net outflows in May, reflecting more cautious sentiment after the metal’s earlier rally.

Still, the broader investment picture has not turned fully negative. Year-to-date gold ETF flows remain positive at around $17 billion, suggesting that longer-term buying interest has cooled but not disappeared.

“Buying interest has not disappeared, but it has weakened and become more selective,” Tran said.

Central bank demand continues to provide support, with reserve diversification and higher gold allocations keeping the long-term case intact. In the near term, however, that support is not strong enough to fully offset pressure from the dollar, Treasury yields and expectations of tighter Fed policy.

Gold was steady after Israel and Iran agreed to end attacks that had threatened wider regional stability and disrupted market sentiment. The halt followed an appeal by US President Donald Trump for de-escalation, after the conflict raised concerns over energy flows through the Strait of Hormuz and pushed oil prices higher.

Higher oil prices can feed inflation concerns, making central banks less likely to cut rates quickly. That creates a difficult backdrop for gold, which tends to benefit from uncertainty but struggles when higher yields and a stronger dollar dominate investor positioning.

Tran said gold could move lower if short-term pressures intensify, with the $4,000 an ounce area becoming an important level where the market reassesses the metal’s appeal after its previous rally.

“However, this does not mean that gold’s long-term trend has reversed,” Tran said. “Compared with the same period last year, gold remains at an elevated level, while central bank demand and the ongoing trend of reserve diversification continue to provide fundamental support.”

- With inputs from Bloomberg.