BATOOL GHAITH (Abu Dhabi)

Gold remains under pressure as US Treasury yields climb to levels not seen in roughly two decades, but continued central-bank buying, renewed investment flows and stronger demand for bars and coins in the UAE are helping support the longer-term outlook, market analysts said.

According to Forex.com, the market environment has shifted significantly over recent months, as oil has retreated from recent highs, while rising US Treasury yields have emerged as a more immediate challenge for precious metals and other risk assets.

Razan Hilal, Market Analyst at Forex.com, said markets are now balancing softer signals from crude against tighter financial conditions.

“If yields begin to reverse while oil remains below its September highs, some of the pressure on gold, silver and broader risk assets could begin to unwind. For the UAE, the key question is whether domestic market resilience can continue to offset a more cautious global backdrop,” Hilal said in a statement sent to Aletihad.

Gold and silver are again testing the lower end of their 2026 ranges, although rebounds from around $3,930 per ounce for gold and $54 per ounce for silver have developed near historically important technical levels, the statement said.

Hilal added that the longer-term bullish structure remains intact for now, although a decisive break below those levels would weaken that technical picture and open the possibility of deeper declines.

Nagham Hassan, Market Analyst at eToro, said gold is trading more than 20% below the record high it reached in January, with rising US government bond yields reducing its relative appeal.

“The pressure comes from the bond market, where US government yields have climbed since the spring and the 30-year yield recently hit its highest level in roughly two decades,” Hassan told Aletihad.

She said higher oil prices can keep inflation elevated, prompting central banks to raise rates and pushing bond yields higher.

“Gold pays nothing, while a US government bond now pays over 5% a year with almost no risk, so fewer people see a reason to hold gold, and money has been moving out of it,” she explained.

Hassan said the US Treasury had made two attempts since July to bring long-term yields down, but yields continued to rise, with the US deficit near 6% of GDP and government borrowing remaining high, investors are demanding greater returns to lend.

Despite the pressure on prices, investment demand has shown no signs of reversing, Hassan pointed to the World Gold Council figures showing that gold exchange-traded funds recorded $31 billion in inflows in the third quarter.

Central banks bought 289 tonnes of gold in the second quarter, which she noted was a record for that period, while 45% indicated plans to increase their holdings.

UAE Buyers Shift Towards Investment Gold

In the UAE, Hassan said buying patterns are also changing, as consumers are purchasing more gold bars and coins and less jewellery, according to World Gold Council data.

Bar and coin purchases increased 30% year-on-year in the second quarter, helped by Indian buyers finding gold cheaper in the UAE after India increased its import tax, she added.

Jewellery sales, meanwhile, were lower than a year earlier as high prices and fewer tourists weighed on demand, Hassan noted.

She also said the UAE Central Bank also increased its gold holdings during the first half of the year, reaching about 75 tonnes by the end of July, equivalent to around 4% of total reserves. She noted that the same forces currently weighing on gold also underpin part of its longer-term case.

“High bond yields hurt gold now, but the reason yields are high is that inflation refuses to fall and governments keep borrowing more, and both of those are conditions gold has historically protected against,” Hassan said.

She added that expensive equity valuations and concerns surrounding the scale of AI-related spending could also strengthen demand for safe-haven assets if stock markets correct.

“Bonds are winning the short-term contest for investors’ cash. Over a longer horizon, inflation, debt and expensive equities are the reasons central banks and ETF buyers are still accumulating, and I expect that to keep a floor under the price even if the near-term pressure continues,” Hassan said.