DUBAI GOLD | 23 DECEMBER 2024

Ever considered why gold is so valuable? In addition to the emotions that people attach to gold, its scarcity also plays a part. The world’s gold reserves are only 190,000 metric tonnes, and gold mining is becoming more and more challenging. Gold is seen as a strong inflation hedge because of its restricted supply.

Here are some of the factors affecting gold prices in Dubai:

Gold Demand & Supply 

Gold prices are invariably decided by the demand and supply factors. Demand for gold in Dubai generally increases during festive or wedding seasons and hence we see prices of gold making highs during that period.

Exchange Rate

The US dollar’s peg to the UAE’s Dirham (AED) is another factor influencing gold prices in Dubai. Any shifts in the US dollar’s value will have a direct effect on gold prices in the United Arab Emirates. Consequently, gold prices fall as the US currency strengthens and vice versa.

Global Market Trends

Gold is seen as a “safe haven.” This indicates that when there is market uncertainty, like COVID-19, war, etc., investors rush to purchase gold. Gold is also a hedge against inflation. Therefore, if global inflation rises, like it did in 2023, the price of gold will rise as well.

Government Policies

The price of gold is occasionally influenced by fiscal policy. Gold returns are discouraged by increased taxes, import duties, permits to dig more mines, etc. Did you wonder why gold prices were hampered by permission to drill more mines? More mining would increase the supply of gold, and as we know from economics, the more gold there is, the lower the price.

Technical Analysis

Technical analysis can be used to forecast the trend of the price of gold, just like it can for any other asset class. Gold price charts can be used interchangeably with stock and index indications and patterns. To help you decide whether to invest in gold, StockEdge offers a variety of screens for analysing and forecasting gold prices.