Dubai Gold Prices Drop 34 Dirhams

Gold Prices Decline in Dubai: 34 Dirhams Drop in a Month

After reaching a historic peak in April 2024, gold prices underwent a significant correction in Dubai, where they fell by 34 dirhams per gram by mid-May. The primary reasons behind the price drop are the easing of global geopolitical tensions and a trade agreement between the United States and China. These factors bolstered investor risk appetite, causing safe-haven assets like gold to fall out of favor.

From Peak to Drop: Gold's Rapid Retreat

On April 22nd, the price of gold per ounce reached an all-time high of $3,500. This level was attributed to a series of global uncertainties, including central bank gold purchases, trade wars, and geopolitical conflicts. However, over the course of a month, the price dropped by 8.5%, settling at $3,201. In Dubai, during the same period, the price of gold per gram decreased from 420 dirhams to 386.

What Lies Behind the Scenes?

Several factors have contributed to bolstering investor confidence:

-The easing of trade tensions between the United States and China;

-Stabilization of the geopolitical situation in several regions;

-Spectacular rebound of stock markets, including a 20% rise in U.S. indexes.

Together, these factors signal to investors that the risks are lower, encouraging them to invest more boldly in other assets, such as stocks or cryptocurrencies. Consequently, demand for gold has significantly decreased.

What to Expect in the Coming Months?

Analysts suggest that further decreases in gold prices cannot be ruled out. Some believe the price of this precious metal could even dip below $3,000 per ounce in the next quarter, although substantial market support is anticipated around this level.

The following factors could continue to support gold prices in the long term:

-Central bank purchases, particularly from China;

-Global inflation concerns;

-Long-standing budget deficits and rising debts;

-Geopolitical risks that could flare up again at any moment.

Some institutional investors are already "waiting for the dip" to buy gold at more favorable prices again. Conversely, others are selling their existing stocks for profit realization purposes.

What Does This Mean for Dubai Buyers?

Dubai is a global hub for gold purchases, especially in retail and jewelry markets. The current price correction offers an excellent opportunity for those planning long-term investments or considering jewelry purchases. Prices are significantly lower compared to the peak, which could boost demand in the local market.

Summary

Although gold prices have dropped sharply in the past month, this movement is seen as a natural market correction after a previous excessive rise. Should the global economic and political situation continue to stabilize, gold prices could potentially plummet below the $3,000 mark for the long term. Nevertheless, long-term investment arguments—such as central bank purchases and macroeconomic risks—remain in place, ensuring that gold continues to be a significant player in the global investment landscape.

(Source of the article: Dubai Jewellery Group data.)