Today's Edition
BATOOL GHAITH (ABU DHABI)
Gold is shining brighter than ever, rising nearly 90% over two years while breaking new records.
Prices soared to $3,820 per ounce on Monday; compared to the same time last year, it has risen by almost 44%. Since the beginning of the year, prices saw an increase of approximately 46% from around $2,623 in January.
This surge is due to multiple factors, according to experts, with the main reasons being global economic uncertainty, expectations of lower interest rates, a weakening US dollar, and strong retail demand.
Jameel Ahmad, Chief Analyst at GTC in Dubai, explained that global economic factors are the overwhelming driver behind the remarkable momentum for gold.
“The sharpest fall the US dollar witnessed in around 50 years during the first half of the trading year, relentless uncertainty around trade tariffs leading to more concerns about the US economy, potential interference (public criticism) by the Trump administration on US central bank policy, and the overall momentum towards lower interest rates worldwide affected gold prices,” Ahmad told Aletihad.
“Expectations over lower interest rate policy bias has always historically been seen as a positive correlation towards helping gold sentiment,” he said.
Geopolitical uncertainty has not been the primary factor as other assets sensitive to geopolitical risk, such as oil, would have witnessed similar sentiment and that has not been the case.
“Warning signs are coming through now that the US economy and jobs growth are slowing down, which means the expectations for lower interest rates will get stronger and gold will ride that wave,” Ahmad noted.
Wajdi Makhamreh, an economic expert, said the surge is primarily driven by macroeconomic pressures, persistent inflation eroding purchasing power, a weakening US dollar, and lower interest rates.
“Central bank policies, especially interest rate decisions, have had a substantial inverse impact on gold prices. In the US, the Fed’s shift toward rate cuts in 2024-2025 has lowered real yields, making gold more appealing than bonds,” Makhamreh told Aletihad.
He added that investors and institutions are increasing gold holdings largely due to long-term safety amid economic turbulence, compounded by geopolitical tensions, trade disputes, regional instability, and conflicts.
“Central banks, as institutional buyers, are acquiring gold to reduce reliance on the US dollar. Overall, safe-haven status is central, but geopolitical and retail factors make it a multifaceted trend,” Makhamreh noted.
In 2024, gold demand continued despite elevated prices. Total demand reached 4,974 tonnes, a 1% increase compared to 2023.
The first quarter of 2025 saw total gold demand at 1,206 tonnes, reflecting a 1% increase compared to the same period in 2024. Investment demand was robust, with significant inflows into gold-backed exchange-traded funds (ETFs) contributing to overall demand.
By the second quarter of 2025, demand reached 1,249 tonnes, marking a 3% increase year-over-year.
Investment demand continued to see strong inflows into gold-backed ETFs.
According to Makhamreh, from 2024 to 2025, consumer behaviour towards gold has shifted into investment, with retail investors increasingly turning to gold bars, coins and ETFs.
Makhamreh anticipates the uptrend in gold prices to continue into 2026. Forecasts suggest averages of $3,800 per ounce by the end of 2025, rising to $4,000 by mid-2026.
“A correction could occur if equities strengthen seasonally or if geopolitical tensions ease temporarily, potentially pulling prices back 5 to 10% before resuming higher,” he noted.
Tawfiq Nasir, a gold trader in Abu Dhabi, said that the demand for gold over the past year has been strong but selective.
“Customers are buying both jewellery and coins, but there is more interest in coins and smaller gold pieces due to high prices. Many are investing, but for personal use, and gifts still make up a significant portion,” Nasir told Aletihad.
As prices continue to rise, Nasir pointed out that the investment motive has become stronger because of the economic uncertainty.
“If prices continue to rise, we expect more cautious purchases,” Nasir added.
