Gold prices swing in Dubai: Bigger dip to come before summer buying picks up?

Dubai: After soaring to record highs earlier this year, gold prices in Dubai have entered a volatile correction phase — swinging wildly in recent days and leaving buyers wondering how long the dip will last, or if prices could fall further.

A new report from ICICI Bank Global Markets expects the recent price dip to be short-lived, with gold trading between $3,050 and $3,250 per ounce in Q2 2025, suggesting some near-term stability rather than another big spike.

After climbing nearly 25% in the first four months of 2025, gold has pulled back sharply over the past fortnight, shedding more than $300 from its all-time high. Spot prices fell to around $3,185 an ounce as of Friday, with last week marking bullion’s biggest weekly loss in six months.

In Dubai, 22K gold briefly dropped below Dh350 per gram last week — from a high of Dh381.50 — but quickly rebounded to Dh357, frustrating buyers hoping for a deeper dip. Retailers note that despite offers like zero making charges, demand remains weak, with shoppers waiting for prices to return to March levels near Dh340. (Check live rates here.)

The immediate trigger? Progress on multiple geopolitical fronts. The first direct talks in over three years between Russia and Ukraine ended in Turkey with prisoner exchanges and discussions on a possible ceasefire. While no truce was announced, the breakthrough reduced war-related uncertainty, cooling demand for safe-haven assets like gold.

Simultaneously, easing trade tensions between the US and China have lifted global market sentiment, further reducing gold’s appeal as a hedge against geopolitical risk. Tariff rollbacks from both sides helped risk assets rebound sharply.

Also contributing to the softness in prices is a shift in expectations that the US Federal Reserve may cut interest rates only twice this year — fewer than previously thought. This makes non-interest-paying assets like gold relatively less attractive.

“Gold is seeing some fatigue, as tariff de-escalation takes away some uncertainty, at least for now,” noted Christopher Wong, a currency strategist at OCBC Bank.

The drop, however, doesn’t erase the bullish trend entirely. Gold remains up more than 20% year-to-date, supported by strong central bank buying, speculative demand in China, and inflows into bullion-backed ETFs.

Mark Haefele, Chief Investment Officer at UBS, said ongoing volatility in US risk assets and the dollar may prompt more global investors to hedge their dollar exposure. “Gold remains an important diversifier,” he noted.

Still, analysts and retailers believe this price correction is likely temporary. With gold continuing to hover at elevated levels, many UAE buyers are in “wait-and-watch” mode. But if Dubai’s rates fall just Dh3 to Dh5 further, jewellers may roll out aggressive summer offers to entice hesitant shoppers.

Outlook for this week: Unless a new global shock re-ignites safe-haven demand, Dubai gold prices are expected to remain rangebound — possibly hovering between Dh350 and Dh362 per gram for 22K. Buyers hoping for steeper declines may need to act quickly if prices start climbing again.