Gold Prices Hit New Highs in Dubai

Gold Surpasses 400 Dirhams/Gram: Prices May Stay High

Gold prices have reached a historic high in Dubai, showing no signs of a rapid decline. Last week, the price of 24-karat gold closed at 400.75 dirhams/gram, while 22K was 371.25, 21K was 356, and 18K was 305 dirhams per gram. Not only has the local market hit records, but the global market also achieved a milestone with gold's international rate reaching $3,315 per ounce, and analysts expect even higher levels in the coming months.

What's behind the price surge?

International analysts highlight several factors driving the continued rise in gold prices:

Interest rate expectations: U.S. inflation figures from March fell short of expectations, increasing the likelihood of the Federal Reserve initiating a rate cut as soon as September—or even earlier. This is a major driving force for gold, as a low-interest-rate environment typically enhances gold's appeal as an interest-free but stable investment.

Central bank purchases: Several central banks around the world continue to increase their gold reserves, ensuring steady demand in the commodities market.

Physical shortage: Some market participants suggest there is an exceptionally rare physical shortage in the global gold market, indicating that further price increases are needed to release existing stocks.

Geopolitical tensions: The conflict between Russia and Ukraine persists, tensions are rising in the Middle East, and uncertainty is intensifying in several global hotspots. In such environments, investors increasingly seek safe-haven assets—and for centuries, gold has been considered the most stable refuge asset.

Price forecast: How high can gold go?

Citi Research analysts raised their ounce price forecast from $3,200 to $3,500 after it surpassed the $3,300 mark. Another leading analyst stated that the current movements signify the end of an earlier price correction, with a growing probability of further increases.

While making precise predictions is always risky, the analyst consensus is clear: barring any unforeseen developments—such as easing geopolitical tensions or the absence of an interest rate cut cycle—gold prices could continue to rise, potentially setting new historical records in the coming months.

What does this mean for Dubai residents and buyers?

Dubai's gold market is globally renowned for its favorable prices and quality offerings, so it is not surprising that residents and visiting tourists often purchase gold jewelry. However, in the current price environment, many are holding off or looking for smaller pieces, while others are investing in gold, confident that prices will rise further.

According to traders, demand remains strong, but more people are showing interest in gold market trends and making more informed purchasing decisions.

Summary

Gold continues to stand on strong fundamentals: geopolitical uncertainty, anticipated interest rate cuts, and demand factors all suggest that prices may stabilize at a high level—or even rise further. For Dubai's buyers and investors, this represents both a challenge and an opportunity: while jewelry prices increase, gold remains an attractive asset for achieving long-term investment goals.

(The article is based on analysis by Citi Bank.)