Dubai Gold Market Hits Record Highs

Dubai's gold market has soared to new historic heights: the price of 24 karat gold has reached 510 dirhams per gram, rising by more than 25 dirhams in the past week. The price of 22 karat gold climbed to 472.25 dirhams, while 21 and 18 karat gold were offered at 452.75 and 388.25 dirhams respectively at market opening. This marks the fourth consecutive day of record highs in Dubai's gold market.

On the international market, the spot gold price also rose and crossed the $4,200 per ounce mark, reaching $4,231.5. This represents an increase of more than 1%, signaling not only a rise in local demand but also a growth in global demand.

What drives the prices?

Several interconnected economic and geopolitical factors are behind the current gold price surge. Firstly, the weakening of the dollar has significantly contributed to the strengthening of gold. Investors traditionally treat gold as a safe haven when instabilities occur in the world's leading currencies, particularly the dollar.

Secondly, expectations related to interest rate cuts are also supporting the rise in gold prices. A lower interest rate environment reduces alternative returns (e.g., for bonds), bringing non-yielding assets like gold back into focus.

Thirdly, the volatility in global capital markets, especially concerns about possible overvaluation of American tech stocks, has led many investors to diversify their portfolios with gold.

Institutional and household demand simultaneously drives prices up

A distinctive feature of the current increase is that not only institutional investors but also retail buyers are actively participating in the growth of demand. According to reports from jewelry stores operating in Dubai, interest in both investment gold bars and decorative gold jewelry has increased in recent weeks. This is particularly notable as high prices usually restrain retail purchases—but that is not the case now.

The demand for gold jewelry and bars might be boosted by the upcoming festive season when many families traditionally purchase gold as gifts. Dubai plays a prominent role in this, as the emirate is an attractive destination for buyers not only because of its tax-free status but also due to its world-class gold trading infrastructure.

Gold becomes a strategically significant asset

Experts agree that gold is no longer just an asset that comes into focus during crises. Increasingly, it is viewed by institutional investors as a strategic core asset that guarantees stable long-term value preservation. Analysts at the brokerage firm Pepperstone believe that gold is currently experiencing one of its most stable bull markets in recent years. Over the past month, its price has increased by 15 percent, while each of its declines has been only a short correction of less than 2 percent—an indication that demand is not the result of a temporary spike, but part of a deeper economic trend.

High American stock valuations, uncertainties related to inflation, and geopolitical tensions all prompt investors to put their money into something 'safe.' And what could be safer than an asset that has been a symbol of value preservation for millennia?

How long can the rise last?

Naturally, after such a dynamic rise, many ask when a correction or even a downturn might occur. Analysts believe a short-term pullback would be entirely healthy for the market; however, the longer-term trend still clearly points upwards. Unlike previous gold price surges, demand is now rising not on speculative grounds but due to real market and economic risks.

An important aspect is that the physical availability of gold—especially high-purity 24 karat bars—is beginning to contract in some markets. This also strengthens prices, as when supply cannot keep pace with demand, it inevitably triggers further price increases.

Dubai's role in the global gold market

Dubai has always been a central player in gold trading, but in recent years, its position has continued to strengthen. The emirate possesses logistical and trading advantages that few other markets can match: tax-free purchases, an extremely wide range, high-quality standards, and a strict authentication system.

The Dubai Gold Souk and new gold market centers like the Dubai Multi Commodities Centre (DMCC) contribute to making the emirate one of the largest gold importers and exporters in the world. Therefore, prices here often reflect not only local demand but also the global investor sentiment.

Summary

The price of gold in Dubai has risen to new historical peaks, and the trend currently shows no signs of weakening. Global macroeconomic factors, the weakening dollar, interest rate expectations, and concerns about tech stocks all contribute to making gold—particularly the 24 karat variant—highly sought after.

Dubai's gold market is currently a key place not just for investors but for everyday buyers as well, where they are not just purchasing value but at the same time seeking shelter amid economic uncertainties. Whether it's jewelry or investment gold, the current market environment clearly tilts the balance in favor of gold.

(Source of the article: Based on data from Pepperstone.)