Gold Triumphs Over Stocks in UAE

Why More Investors in the UAE Choose Gold Over Stocks

The demand for gold has once again taken center stage in the United Arab Emirates, particularly in Dubai, where investors are increasingly turning to the precious metal instead of the stock markets. Although periodic rises in gold prices are not new phenomena, the current trend is particularly noteworthy: while global stock markets, including major ones in the Middle East, show mixed performance, gold continues to reach new historic highs.

Gold in Uncertainty: Refuge or Strategy?

In recent months, the price of gold has increased by nearly 17% since mid-August, with trading nearing a value of $3,900 per ounce, marking a new high. Market participants do not rule out the possibility of reaching the $4,000 level by the end of 2025 or early 2026.

Several factors underpin the rise in gold: global geopolitical tensions, a slowing American economy, and anticipated interest rate cuts in the USA. All these strengthen gold's role as a safe haven.

In Dubai, where gold trading holds historical significance, this trend is particularly striking. According to data from the Dubai Jewellery Group, the price of 24-carat gold has exceeded 467 dirhams per gram, while the 22-carat variant hovered around 432.5 dirhams.

Stock Market Performance Recedes

While gold has trended upwards, regional stock markets have shown significant declines during the same period. The Dubai stock exchange weakened by about 4%, and the Abu Dhabi market fell by 2%. Only Saudi Arabia's Tadawul showed a positive direction, rising 5% due to a rebound in recent days.

This contrast is particularly apparent to investors who are sensitive to market volatility and tend to seek out safer assets. Gold has become a kind of "symbol of trust" during uncertain times, and this role is now even more reinforced.

Not a Withdrawal, but a Rearrangement

Many interpret the phenomenon as investors abandoning stocks. However, this is not entirely true. The composition of portfolios is changing: investors are more consciously seeking assets that can bring stability to the fluctuating market world. Gold has become a tool in strategic diversification.

The emphasis is not on "gold vs. stocks," but rather on "gold and stocks." Investors maintain their exposure in stocks and bonds while strengthening the role of gold in their portfolios.

Rise of Wealthier Segments

The turn towards gold is particularly noticeable among high net worth investors living in the UAE, who are typically less sensitive to price fluctuations. In the first half of 2025, the cash ratio within portfolios decreased to 13%, well below the global average of 20%. Part of the released capital flowed into physical gold bars, gold purchased through digital platforms, and tokenized gold assets.

At the same time, gold's role as a portfolio diversification tool has been further strengthened. The shift is not a panic reaction, but a conscious strategy that takes into account gold's long-term value retention capability.

Macroeconomic Factors and Expectations

The market currently expects the U.S. Federal Reserve to make two rate cuts by the end of 2025, which typically entails a weakening of the dollar and government bond yields, further increasing gold's appeal.

Signs of slowdown have also appeared in the U.S. labor market, especially based on September's data showing a decline in private sector job positions. All this further strengthens the expectations of monetary easing.

Additionally, the looming possibility of a U.S. government shutdown also causes tension in the markets, further boosting demand for "safe haven" type assets.

Geopolitical Risks in the Region

Demand for gold is not driven solely by overseas developments. The Middle East region also faces numerous geopolitical uncertainties, which also steer investors towards gold. Conflicts stretching from the Middle East to Eastern Europe, as well as global tensions related to elections, all contribute to reinforcing gold's role in investment strategies.

Conclusion

A notable shift is evident in the investment culture of Dubai and the entire UAE towards assets that provide security, with gold once again in the spotlight. The combination of stock market volatility, changes in monetary policy, and geopolitical uncertainties have created an environment where gold's role as a stabilizing asset has become more valuable.

The current trend does not necessarily indicate that stocks are being abandoned, but rather that investors are searching for a new balance. In a world where "higher rates for longer" might be the new norm, gold can be both a refuge and a strategic asset in portfolios—and more and more investors are recognizing this in Dubai and the entire region.

(The article is based on the gold stock price.)