UAE, Dubai: Precious metal markets tumble as geopolitical tensions, rising inflation expectations, and stronger dollar reshape global investment trends and demand outlook
Gold prices extended their downward trajectory on Monday morning, marking a sharp decline across global and UAE markets as economic and geopolitical pressures continued to weigh on investor sentiment.
In the UAE, the price of 24K gold fell significantly to Dh526.25 per gram, down from Dh541.5 at last week’s close. The drop of Dh15.25 per gram reflects mounting pressure on the precious metal amid shifting global financial dynamics.
The decline is part of a broader trend seen throughout March, during which gold prices in the UAE have fallen by more than Dh118 per gram. The drop highlights a notable reversal from the metal’s earlier resilience as a safe-haven asset.
Other gold variants also recorded steep losses. The 22K category slipped below the key psychological threshold of Dh500, trading at Dh487.25 per gram. Meanwhile, 21K, 18K, and 14K gold were priced at Dh467.25, Dh400.5, and Dh312.5 per gram, respectively.
On the global stage, spot gold prices dropped to $4,356.48 per ounce, reflecting a decline of nearly three percent in early trading. Silver followed a similar pattern, falling 2.9 percent to $66 per ounce.
Analysts attribute the ongoing decline to a combination of geopolitical tensions and macroeconomic factors. The conflict involving the United States, Israel, and Iran has significantly impacted global markets, particularly through its influence on energy prices.
According to Ole Hansen, the escalation in energy costs has played a critical role in shaping investor expectations. Higher oil and fuel prices have contributed to rising inflation concerns at a time when central banks are already cautious about adjusting monetary policy.
Hansen explained that the surge in oil and refined product prices, especially diesel, has reduced the likelihood of near-term interest rate cuts. Instead, markets are increasingly pricing in a “higher-for-longer” interest rate environment.
This shift has strengthened real yields, which poses a significant challenge for gold. As a non-yielding asset, gold tends to lose its attractiveness when investors can secure higher returns from interest-bearing instruments.
Another key factor behind the decline is the strengthening of the US dollar. During periods of geopolitical stress, investors often move capital into dollar-denominated assets, reinforcing the currency’s value.
The stronger dollar creates a competing safe-haven dynamic that diminishes gold’s traditional appeal. As the dollar rises, gold becomes more expensive for holders of other currencies, reducing global demand.
Market participants are closely monitoring how these forces interact in the coming weeks. While geopolitical tensions typically support gold prices, the current environment presents a more complex picture.
The combination of rising inflation expectations and elevated interest rates has altered the traditional relationship between gold and global uncertainty. Instead of benefiting from safe-haven demand, gold is facing pressure from macroeconomic headwinds.
In the UAE, the decline in gold prices is likely to influence both retail and institutional buyers. Lower prices may encourage some consumers to increase purchases, particularly ahead of festive seasons or wedding periods.
However, for investors, the outlook remains uncertain. The volatility in global markets and shifting monetary policy expectations are making it difficult to predict near-term price movements.
Experts suggest that gold’s future trajectory will depend on several key factors, including the direction of the US dollar, central bank policies, and developments in the Middle East conflict.
If energy prices continue to rise and inflation remains elevated, central banks may delay rate cuts further. This scenario would likely keep pressure on gold prices.
On the other hand, any signs of easing geopolitical tensions or a slowdown in inflation could provide support for the metal. A weaker dollar and lower yields would make gold more attractive to investors once again.
Despite the recent decline, gold continues to hold long-term appeal as a store of value and hedge against economic uncertainty. However, the current market environment underscores the importance of broader economic forces in shaping its performance.
The sharp drop in March serves as a reminder that gold is not immune to global financial shifts. As investors navigate a complex landscape of geopolitical risks and economic challenges, the role of gold in portfolios may continue to evolve.
For now, the focus remains on how global developments unfold. With markets reacting to every new signal, gold prices are expected to remain volatile in the near term.
As traders and consumers alike keep a close watch, the precious metal’s next move will depend on whether traditional safe-haven dynamics can reassert themselves in an increasingly unpredictable world.