Rates in Dubai soften following a pullback in global prices on reduced war tensions.
Dubai: Gold prices in Dubai started the week lower, following a pullback in global bullion markets as geopolitical signals grew mixed and investors reassessed risk.
8:15 a.m.: 24K gold was trading at Dh560.50 per gram, down from Dh563.50 on Sunday. The 22K variant fell to Dh519 from Dh521.75, marking a modest but noticeable easing for retail buyers.
The decline follows a volatile period in March, during which prices surged sharply before momentum began to ease.
Global gold prices found some support after early losses, trading near $4,630 an ounce as markets reacted to reports of a diplomatic push involving the U.S., Iran and regional mediators exploring a potential 45‑day ceasefire in the Middle East, which eased some safe‑haven demand.
The change in sentiment has started to ease immediate safe-haven demand, even as the broader conflict remains unresolved and headline risks continue to drive short-term market swings.
Mixed signals from Washington are also influencing market direction. President Donald Trump over the weekend renewed warnings of potential escalation, including threats related to the Strait of Hormuz, while also hinting at further announcements on a set timeline, keeping traders cautious.
War impact now fueling inflation concerns
In recent weeks, gold’s movements have been driven less by safe-haven buying and more by inflation worries stemming from energy markets.
Gold prices have dropped roughly 12% since the conflict began in late February, as rising fuel costs have heightened expectations that central banks will remain cautious on rate cuts. Higher oil prices have already pushed up U.S. gasoline prices, adding to consumer inflation pressures.
This dynamic is significant for bullion. Gold generally benefits in a low-interest-rate environment, so any delay in monetary easing reduces its appeal compared with yield-bearing assets.
Strong U.S. data complicates the outlook
Fresh economic indicators from the U.S. have added further complexity. Nonfarm payrolls in March rose at the fastest pace since late 2024, reinforcing expectations that the Federal Reserve will prioritise inflation control over rate reductions.
Economists are now preparing for a sharp rise in U.S. inflation data this week, with forecasts pointing to a 1% monthly increase in the Consumer Price Index (CPI) — the steepest jump since 2022 — reflecting the direct impact of higher energy costs.
Investors are also adjusting their positions after recent gains. Bullion had climbed more than 4% last week before reversing course, with Thursday’s drop ending a four-day rally.
Implications for UAE buyers
Short-term price dips may provide limited relief for UAE shoppers, especially ahead of seasonal buying periods, but volatility remains high and largely influenced by global developments.
Looking ahead, price direction will depend on three key factors: the progress of ceasefire talks, trends in oil prices, and how central banks respond to mounting inflation pressures.
