Gold prices experienced a notable rise on Friday, May 9, 2025, following a significant drop triggered by U.S. President Donald Trump's announcement of a trade deal with the U.K. As market focus shifts to the upcoming U.S.-China talks, investors are keenly watching how these developments will affect gold prices in the short term.
In Dubai, the price of 24-carat gold fell by AED11.75 in the last 24 hours, settling at AED397.25. Meanwhile, 22-carat gold saw a decline of AED10.75, bringing its price down to AED367.75. Other gold categories also faced declines, with 21-carat gold dropping AED10.25 to AED352.75 and 18-carat gold dipping AED9 to AED302.25. Just a day prior, gold prices were trading a mere AED3.5 away from their all-time high, illustrating the volatility of the market.
As gold prices fluctuated, spot gold gained 0.18 percent to $3,309.89, while U.S. gold futures rose by 0.23 percent to $3,313.56. In the past week, bullion has gained over 2 percent, reflecting a complex interplay of market forces.
Following the announcement of a "breakthrough deal" between Trump and British Prime Minister Keir Starmer on Thursday, gold prices took a hit. Although a 10 percent tariff on goods imported from the U.K. remains in place, Britain agreed to lower its tariffs from 5.1 percent to 1.8 percent, providing greater access to U.S. goods. Analysts are cautious, predicting that the high-level talks between the U.S. and China this weekend will drive market flows away from gold, further limiting any potential price gains.
In the wake of these developments, several U.S. Federal Reserve officials are scheduled to speak later in the day, offering insights into the economy and the Fed’s policy direction. This follows the Fed's decision on May 7 to hold interest rates steady between 4.25 percent and 4.50 percent, a move that aligns with market expectations. Vijay Valecha, chief investment officer at Century Financial, stated, "The Federal Reserve voted unanimously to leave interest rates unchanged... the U.S. economy remains on a solid footing, as evident from the persistent strength in hard economic data, particularly labor market reports." Gold is traditionally viewed as a hedge against economic and political uncertainties, thriving in low-interest-rate environments.
April saw a significant inflow into physically backed gold exchange-traded funds (ETFs), with 115.3 metric tons worth $11.2 billion flowing in, marking the largest amount since March 2022. This influx was largely driven by funds listed in China, reflecting the impact of ongoing trade tensions with the U.S. By the end of April, total holdings in gold ETFs rose by 3.3 percent to 3,560.8 tons, the highest level since August 2022.
As gold prices fluctuate amid trade discussions, the precious metals market showed mixed results on Friday. Spot silver fell 0.40 percent to $32.36, while platinum gained 0.17 percent to $977.29. Palladium, however, edged down slightly by 0.04 percent to $975.45.
In the UAE, shoppers are expressing hope for gold prices to dip below AED360, with many looking for prices to reach between AED350 and AED355 per gram before making their next purchase. The local price for a gram of 22K gold is currently AED367.75, down from AED378.5 just two days prior. Retailers noted that shoppers are hesitant to buy gold when prices exceed AED370, viewing these levels as inflated. “They only made an exception on April 30 because it was ‘Akshaya Trithiya,’ when 22K was AED369,” mentioned a gold retailer.
Despite the recent drop, there are signs that the Dubai Gold Rate could stabilize around AED360, with some optimism that it might even dip to AED355. However, returning to AED350 levels may prove challenging. The lowest price point in the last 30 days was AED351.25 on April 10, 2025.
Tourists are expected to flock to the Gold Souq and jewelry outlets as prices fluctuate. Anil Dhanak, Managing Director at Kanz, noted, "Whatever tourist shopping we see is done through buying new gold jewelry... out of every 10 purchases by a tourist, one or two would be through gold exchanges, at least that's what we see at our stores." For UAE residents, the sentiment is clear: many are waiting for the "right" price before making their purchases.
The current market dynamics indicate that while gold prices may continue to fluctuate, the interest in gold jewelry remains high, particularly among shoppers who are keenly aware of price trends. As the situation develops, both local and international markets will be watching closely to see how geopolitical events influence gold prices in the coming days.
