Gold’s latest price movements have left investors and jewellery buyers weighing whether the recent pullback signals the beginning of a deeper retreat or simply a natural cooling period after an exceptional rally. In the UAE, gold prices edged modestly higher on Friday, reflecting resilience in local demand and broad support from global factors.
According to Dubai Gold and Jewellery Group, 24-carat gold closed at Dh482.75 per gram, up from Dh479 the previous day, while 22-carat traded at Dh447, 21-carat at Dh428.50, and 18-carat at Dh367.50. The gains were measured, but notable for occurring during a week when global bullion prices have been retracing from record peaks.
Internationally, gold surged to a historic high of around $4,300 per ounce earlier this month before slipping to about $4,050, a decline of roughly 5.8 per cent. While the dip has sparked concern among some retail investors, market strategists describe the move as a classic correction following extreme overbought conditions.
Technical indicators had been signalling the need for consolidation. The Relative Strength Index (RSI), a widely watched gauge of momentum, reached an unprecedented reading of 92 during the rally — well above the threshold of 70 typically seen as overbought. Such a level almost always precedes a pullback, regardless of fundamentals.
Alex Kuptsikevich, chief market analyst at FxPro, said the correction is not over yet, arguing that the gold price had been propelled by a rare alignment of macroeconomic anxieties that are now easing. “Gold managed to reach a record high thanks to devaluation trading, expectations of aggressive monetary expansion by the Fed, Donald Trump’s threats of 100 per cent tariffs against China, geopolitics, pessimistic forecasts for the global economy, and active purchases of bullion by central banks,” he said.
“But the environment is shifting. The US and China have found common ground, the Middle East conflict has cooled, the Fed remains cautious on cutting rates, and central bank buying is moderating. The yellow metal is gradually losing its wild cards,” he added.
Those comments underscore a broader market debate. Gold’s surge over the past two years delivered gains of about $2,300 per ounce from a base of around $2,000 in late 2023. Against that backdrop, the current $250 retreat represents only around 11 per cent of the total bull market appreciation.
Analysts say such a pause is not only normal but historically consistent. In previous high-momentum cycles, including 1979 and 2011, gold experienced sharp advances followed by periods of consolidation lasting months or more, yet the broader trend remained intact until key fundamentals changed.
What distinguishes the current moment is the seasonal pattern. October has long been recognised as the most volatile month for commodities, with eight out of ten years historically seeing gold experience weakness during the autumn due to institutional portfolio adjustments.
Asset managers often reduce risk exposure before year-end, contributing to selling pressure that can overshadow physical demand. This dynamic is further amplified by cautious weekend trading behaviour, with investors increasingly unwilling to carry leveraged positions into periods where markets are closed and geopolitical headlines can break without warning.
Gold mining stocks have felt the impact even more acutely. While bullion prices have declined by less than 6 per cent, mining equities have fallen between 15 and 20 per cent, illustrating the leverage effect embedded in the sector. Large-cap producers with stronger balance sheets have fared somewhat better, while mid-cap and exploration companies have seen steeper losses as investors reduce speculative exposure. This pattern is characteristic of retracement phases in commodity bull markets.
In Dubai, meanwhile, the picture is more nuanced. The emirate’s status as a global bullion trading hub and a key retail jewellery market means price swings tend to translate quickly into buying behaviour. Traders reported steady footfall this week, with shoppers perceiving the dip in global prices as a favourable entry point. Some retailers expect a pickup in demand ahead of the festive and wedding season, especially if prices stabilise around current levels. Jewellery buyers in the Gulf, traditionally price-sensitive but also value-driven, often view dips as opportunities rather than warnings.
Analysts say the long-term bullish case for gold remains supported by structural factors. These include sustained central-bank reserve diversification, persistent government debt levels in major economies, and growing investor interest in gold as a hedge against currency debasement. However, near-term momentum will depend heavily on US Federal Reserve policy signals, inflation dynamics, and global risk sentiment.
“Gold has stepped off its peak but not necessarily changed direction. The current correction appears more like a pause than a trend reversal, though additional short-term downside remains possible. For now, the message from analysts is clear: gold is entering a phase of consolidation, not collapse. The metal that climbed sharply is now catching its breath,” they said.
