Will Dubai gold price drop more after Trump says no tariffs?

Dubai: The Dubai gold price has dropped to its second lowest level this month to Dh374.75 a gram (22K), even as US President Trump clarified that there will be no tariffs on gold. There is hope that the gold price could drop more in the coming hours.

On August 1, the local price was Dh374 after rising sharply from Dh368.25 in 24 hours.

Trump’s announcement on no gold tariffs comes just days after the US imposed 39% duties on Swiss 1-kilo and 100 ounce gold bars. “Even though it didn’t last beyond a few days, Trump’s tariffs were the best promotion gold bars could get,” said a gold trader. “The smaller sized gold bars are seeing good demand.

“If UAE shoppers have Dh10,000 to invest in gold, they are doing it in gold bars and not in jewellery. At least for the time being.”

In the last 30 days, the lowest point for the 22K Dubai gold rate was Dh365.25 on July 30. This period has seen one of the lowest ever sales of jewellery in the local market, with high prices and summer holiday trips by UAE residents being cited as reasons.

“Gold needs to be back under Dh360 to slowly bring back demand for jewellery,” said a gold retailer. “Even regular jewellery shoppers are thinking of gold for investments, which means less demand for jewellery.”

Meanwhile, there could be another reason why gold prices could slip further – the US and China have decided to extend their talks to reach a deal on tariffs. That could also ease the fund flows into bullion over tariff fears and what that could do to the global economy.

In the global metals market, gold is trading at $3,354 an ounce, lower by over $50. If this trend continues and prices were to drop further to $3,300 or under, that could spark a return of shoppers to jewellery.

"Shoppers need to see a decisive price drop to Dh350 or so for Dubai gold rate to see demand back," said a jewellery retailer. "Otherwise, it will be a slow start to the new season from September."

Meanwhile, UAE investors are liking the shine they are seeing on silver prices. Trading platforms are recording a bump up in silver related trades.

An ounce of silver is at $37.88, having risen steadily in the last 6 months. "76% of our clients are buying silver on expectations that prices will go up more," said an analyst at IG.

"But even though most clients are holding 'buy' positions, many are still taking profits or closing their trades as higher silver prices could face some resistance until a new catalyst push prices higher.

"That price resistance could happen near $37.4–$38.1 an ounce levels."