Gold prices have been trending lower since the start of the Middle East conflict, as rising oil prices have fuelled inflation concerns in the US economy.
UAE gold jewellery demand declined 28 per cent year-on-year in the second quarter of 2026, falling to 5.6 tonnes from 7.7 tonnes during the same period last year, according to data from the World Gold Council.
The drop was attributed to the impact of regional geopolitical tensions and weaker demand from tourists, which weighed on jewellery purchases in the UAE.
However, UAE gold jewellery demand increased 21.7 per cent quarter-on-quarter, as purchases recovered from the impact of record-high gold prices seen in January, which had weighed heavily on jewellery demand.
Gold investment demand rises as UAE jewellery purchases weaken
Gold prices reached an all-time high of $5,589.38 per ounce on January 28, 2026, after the precious metal surged by more than $300 during a single trading session. The rally was largely driven by escalating tensions between the US and Iran, following threats of major military action against Tehran.
While jewellery demand weakened, gold bars and coins saw strong growth in the UAE. Demand for investment gold jumped 30 per cent year-on-year to 5.3 tonnes in the second quarter of 2026, compared with 4.1 tonnes during the same period last year, according to World Gold Council data. On a quarterly basis, demand for gold bars and coins increased 32.5 per cent.
Gold bars and coins continue to be a popular investment option in the UAE due to both cultural and financial factors. Among South Asian, Arab and other expatriate communities, gold is traditionally viewed as a store of wealth passed down through generations and remains closely linked to weddings, festivals and family savings.
From an investment perspective, physical gold is often seen as a hedge against inflation and currency fluctuations, particularly during periods of geopolitical uncertainty and market volatility. Many residents prefer owning physical gold over paper-based investments such as exchange-traded funds (ETFs), as it offers direct ownership, portability and easier resale or use as collateral.
Gold prices have been trending lower since the start of the Middle East conflict, with rising oil prices raising concerns over inflation in the US economy.
On Monday evening, spot gold was trading at $4,026 per ounce, down 1.24 per cent. In the UAE, 24K gold was priced at Dh488.25 per gram, while 22K gold stood at Dh452 per gram at the market opening.
Simon-Peter Massabni, head of business development at xs.com, said gold’s outlook will continue to depend on key factors including inflation trends, US monetary policy, the direction of the US dollar and real bond yields.
He said the medium- and long-term outlook remains supportive of gold’s broader bullish trend, although investors should expect periods of sharp corrections.
“I do not believe new all-time highs should be ruled out if the current supportive fundamentals remain in place,” Massabni said. “However, the better approach is to wait for areas of consolidation and re-entry rather than chasing gold higher during every rally.”
Massabni said gold is entering an important phase that could influence the market’s direction in the years ahead.
“If the current decline proves to be only a correction within a longer-term bull market, today’s prices could eventually be viewed as a period of accumulation before another major advance,” he said.
He added that a sustained move above key resistance levels could mark a shift from a rally driven mainly by uncertainty and hedging towards a broader global repricing of gold.
“Gold is not a story that has ended after the latest correction. It remains an asset with strong structural drivers for further gains, with disciplined risk management and confirmation of technical signals remaining essential for investors navigating the next stage of the market,” Massabni said.
