Dubai gold prices drop Dh34 per gram in a month: Will rates fall further?
Gold price is expected to drop below $3,000 per ounce in the near future as risk appetite is growing among investors, reducing demand for safe-haven commodity, say analysts.
After hitting an all-time high of $3,500 per ounce on April 22, the precious metal has fallen 8.5 per cent to $3,201 per ounce in nearly a month. In Dubai, prices have fallen around 8.1 per cent or Dh34 per gram to Dh386 on May 18, down from an all-time high of Dh420 in April.
The prices have rallied over the past few months due to the central bank's buying, the US tariffs row, and geopolitical tensions around the world. However, as the US and China reached a trade deal, the prices of the yellow metal dropped significantly.
'We have seen a strong gold rally from $3,000 to $3,500, fuelled by concerns about tension between the US Federal Reserve and the US President Donald Trump administration, trade war and geopolitical tensions. With regard to trade uncertainty, we are a little bit more certain because of sub-deals.
"Talks are happening to ease geopolitical situations. So, things have eased now with these two developments. Therefore, the risk appetite has improved, and this weighed on the gold price. If things continue to move in the same direction and we don't see a sudden surprise on these fronts, we expect gold to continue sliding and could go even below $3,000, said Wael Makarem, financial markets strategist lead at Exness.
'Risk appetite is significantly growing as we have seen a 20 per cent rebound in US stock indices and similarly European indices are also close to a record. So this shows a significant rebound in risk appetite,' he said.
Ahmed Negm, head of market research for Mena at xs.com, projected that the yellow metal gold will go down below $3,000 in the second quarter of 2025.
'This is because there is no positive sentiment in the gold market. So risky assets such as cryptocurrencies will be in high demand and rise,' said Negm.
Farah Mourad, senior market research analyst at Equiti, also sees 'a strong cushion' around the $3,000 level.
'The biggest catalyst in the gold rally was central banks and China bought when gold was $2,800 and even around $3,000. The big institutions followed. But the huge peak that followed and the price reached $3,500, it needed a correction. But we are not worried about this correction because it corrected another momentum that was not that logical. We see strong support around $3,000 and it's good for those who were waiting for the dip to re-enter the market,' she said.
Ole Hansen, head of commodity strategy at Saxo Bank, said gold has experienced its sharpest correction in absolute and percentage terms since 2023, breaking through multiple technical support levels.
'Having already hit our 2025 price target of $3,500, we are currently adopting a wait-and-see approach. The market remains between profit-taking from those selling into strength and renewed interest from dip buyers. Despite the recent pullback, several key structural drivers remain intact, including central bank buying, geopolitical risks, fiscal debt concerns, and inflation hedging. These are likely to underpin prices over the longer term, though a period of consolidation may be required before the next significant upside catalyst emerges,' he said.
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