Today's Edition
BATOOL GHAITH (ABU DHABI)
Residents are flocking to Abu Dhabi’s souqs as gold demand surges, with some retailers reporting doubled sales and daily stocks selling out “within hours”.
The spike comes after a turbulent month for precious metals. Gold, which hit record highs earlier this year, slid sharply as markets repriced the outlook for interest rates and inflation.
By Monday, March 23, spot gold had dropped to a little above $4,300 an ounce, down more than 18% since the regional tensions began. The following day, gold traded at $4,389.26 an ounce, leaving it more than 21% below its January 29 peak of $5,594.82.
On Wednesday, a rebound briefly took the bullion back above $4,500 an ounce, supported by optimism that regional tensions might be easing.
The plummeting prices this week triggered a buying surge.
“Hundreds of people are lining up every day to buy gold,” said Faisal Abdelaziz, a sales representative at Naif Gold in Madinat Zayed Gold Centre.
Purchases increased by as much as 100% this week, and stocks were often sold out “within three to four hours” into the day, he told Aletihad.
Abdelaziz noted that the most sought-after items are gold ounces, coins and bars, particularly the 31g, 50g and 100g pieces. “Jewellery is also moving quickly, particularly with the end of Ramadan and Eid. Shoppers took advantage of lower prices,” he noted.
Abdelaziz pointed out that many of his customers are choosing to move their cash into gold because they still see it as a safe-haven asset and a way to preserve value.
Silver, by contrast, has recently lost some of its appeal among local investors. Abdelaziz said interest in silver was stronger at the end of last year and the start of this year, at one point even surpassing gold, but enthusiasm waned after the metal experienced a sharp decline.
“We do not know what to expect currently,” he added.
Jamal Salamah, an Abu Dhabi resident, was among those who went to the souq to increase his gold holdings. “The prices have not hit such a low in a long time, so I wanted to take the opportunity to buy more gold,” he told Aletihad.
However, Salamah said it was not easy to find anything to buy. “I went to Madinat Zayed in the evening after work. I asked tens of shops for ounces or coins, and they all told me they were out of stock.”
He had to wait more than two hours for one store to get some ounces and coins and, at that time, about 40 people stood in line to get in, he said.
“Gold is definitely a safe-haven and a great investment, especially in uncertain times, which is why I have been investing in it,” Salamah said.
Global market analysts say the recent drop in gold prices may seem surprising given the geopolitical tensions, but there are several underlying factors driving the correction.
Jakub Rochlitz, Market Analyst at eToro, said the metal has been under pressure during what is becoming a challenging month for precious metals.
“March is shaping up to be one of the worst months on record for precious metals, following a 10% drop last week, gold prices fell another 6% on Monday in response to the escalating conflict in the Middle East,” Rochlitz told Aletihad.
He noted that the primary driver is the rapidly shifting expectation for interest rate trajectories. Surging oil prices following the escalation in the region have pushed inflation expectations higher.
In parallel, the market is seeing rapid selloffs as investors lock in profits from gold’s 66% rally last year, Rochlitz said.
“Volatility will likely remain high in the near future until markets fully process these new risks. However, the long-term positive outlook has not been entirely dismantled. Future performance will depend heavily on how the conflict evolves, its subsequent impact on inflation, and the resulting actions taken by central banks,” he said.
Ryan Lemand, Co-founder of Neovision Wealth Management, said the recent drop should not be mistaken for a collapse in gold’s long-term outlook, noting that many hedge funds were heavily exposed to equities and bonds. When those markets corrected sharply, they faced margin calls and had to raise cash quickly.
“In such moments, investors often do not sell what is already deeply underwater; instead, they sell the assets that have performed best and remain highly liquid,” Lemand told Aletihad, noting that gold has been one of those assets.
He said that the decline is being driven by liquidity pressure and deleveraging, not by a deterioration in the underlying fundamentals.
Lemand said it is important to distinguish between the layers of gold demand.
Central banks have been steadily accumulating gold as part of long-term reserve diversification, while institutional and individual buyers treat it as a store of value rather than a short-term trade, making these segments largely stable despite market volatility.
