Gold prices in the United Arab Emirates increased on Monday. The latest data from FXStreet shows the price per gram at 519.48 AED, up from 512.44 AED on Friday.
Furthermore, the price per tola rose to 6,059.11 AED from 5,976.98 AED. FXStreet updates these rates daily, aligning international prices with the local currency.
Gold As A Stable Asset
Gold has historically been a stable asset, serving as a store of value and a safe-haven investment. Central banks are prominent gold acquirers, adding 1,136 tonnes in 2022 to support their economies.
The correlation between gold, the US Dollar, and US Treasuries is notable, with gold often increasing as the Dollar weakens. Gold prices are influenced by various factors such as geopolitical issues and interest rates.
During times of geopolitical instability or potential recessions, gold prices typically rise. While lower interest rates boost gold, stronger US Dollar values generally limit price increases.
With gold prices rising, we see this as a clear signal of flight to safety as we approach the year’s end. This upward momentum, happening during a typically lower-volume holiday trading period, suggests a strong underlying bid for safe-haven assets. Traders should take note that such moves can be amplified in thin market conditions.
Drivers Of Gold’s Strength
We believe expectations for US interest rate cuts in early 2026 are a primary driver for gold’s strength. Looking back, the persistent cooling of CPI inflation throughout 2025, which recently saw core inflation dip below the 2.5% mark for the first time in years, has fueled bets that the Federal Reserve will pivot to a more dovish policy. A lower interest rate environment reduces the opportunity cost of holding non-yielding assets like gold.
Geopolitical instability is also adding to gold’s appeal, creating an inverse pressure on the US Dollar. Continuing tensions in key global regions are pushing investors to diversify away from risk assets and the dollar, which has recently struggled to hold its ground above the 104 level on the DXY index. This dynamic directly benefits gold, as a weaker dollar makes the metal cheaper for holders of other currencies.
Furthermore, we cannot ignore the relentless demand from central banks, which has provided a solid price floor for gold. Following the record-breaking purchases we saw back in 2022 and 2023, reports from the World Gold Council confirm that sovereign buying remained exceptionally strong through 2024 and 2025. This institutional flow shows a strategic, long-term shift towards de-dollarisation that underpins the value of bullion.
For derivative traders, this environment favors establishing bullish positions in the coming weeks. We should consider buying call options with expirations in February or March 2026 to capitalize on the anticipated price appreciation driven by potential rate cuts. Long futures contracts also present a direct way to gain upside exposure, though they carry higher risk.
However, it is crucial to manage downside risk, as a surprisingly hawkish statement from the Fed could quickly reverse these gains. We can hedge long positions by purchasing out-of-the-money put options to protect against a sharp pullback. Using bull call spreads is another effective strategy to define risk and cheapen the cost of entry while maintaining a bullish outlook.
