Gold prices in the United Arab Emirates increased on Monday. The price per gram shifted from 392.97 AED on Friday to 398.67 AED, while the price per tola rose from 4,583.58 AED to 4,649.99 AED.
Gold’s appeal is often due to its history as a store of value and its role as a safe asset during unstable times. The precious metal is also considered a hedge against inflation and declining currencies.
The Role Of Central Banks
Central banks are noted as the largest holders of gold. In 2022, they acquired 1,136 tonnes, valued at about $70 billion, marking the highest annual purchase recorded.
Gold prices are affected by several factors, including geopolitical instability and interest rates. Its value tends to increase with a weaker US Dollar, due to their inverse correlation, while geopolitical issues or recession fears can drive prices higher.
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Gold’s Historical Significance
The first part of the article outlines a price increase for gold in the UAE, highlighting a rise in both per gram and per tola measurements over the weekend. From Friday to Monday, we’ve seen a roughly 1.45% jump. This shift reflects recent market responses likely driven by wider macroeconomic pressure points. When gold prices take such upward steps, it’s often in response to broader insecurities — some of which stem from currency fluctuations or shifts in monetary policy outlooks.
Historically, gold’s reputation as a ‘safe haven’ stems from its tendency to retain value during periods when trust in currency or state-backed financial instruments wanes. The idea is simple — when money loses value or volatility increases, participants often turn to gold. It doesn’t promise high income, doesn’t behave like a growth stock, but it does offer consistency during contractions.
The appeal of gold tends to sharpen when inflation expectations rise or economic conditions appear strained. Given the buying behaviour of public institutions, particularly central banks, we may infer that there is currently perceived long-term need for fiscal insulation. We saw 2022 mark the highest accumulation seen in modern records — upwards of 1,100 tonnes reserved — which many interpreted as preparation for medium-term turbulence. Actions from these institutions should not be viewed lightly.
Then there’s the relationship between gold and interest rates. They rarely move in the same direction. When interest rates climb, the opportunity cost of holding non-yielding assets like gold also increases, often leading to price pressure. But in periods where rates plateau or decline, demand for metal tends to rebound. Similarly, because gold is priced in US dollars, any weakness in that currency helps boost its value, particularly for holders trading in other denominations.
With geopolitical tensions rising again in several regions and continued uncertainty around rate moves by policymakers, we’ve observed short-term traders apply upward pressure on bullion contracts. However, outright momentum depends on clear signals from sovereign rate moves and currency index performance.
As participants in the derivatives space, it’s key to assess momentum not purely from price movement, but from the directional intent of these larger macro forces. Fast shifts in options pricing or futures spreads may be telling us more about anticipated central bank manoeuvres than spot charts can reveal. Observing shifts in open interest over short timeframes, particularly after policy updates or economic data releases, may help to isolate where sentiment is leaning.
Over the coming sessions, remain alert to movements in Treasury yields and fresh inflation prints. These will likely guide sentiment in bullion-linked contracts. If the yield curve flattens further or expectations favour a pause in monetary tightening, we may well see continued strength in the front month contracts and further widening in calls versus puts.
Adjusting positions swiftly based on such events often proves more effective than anchoring to static year-end targets. Let volatility be the leading signal — in quiet weeks we reassess, in reactive weeks we act.
