UAE gold prices: Is it the right time to invest? Experts weigh in

But is now the right time for UAE investors to buy?

According to Andrew Naylor, Head of Middle East and Public Policy at the World Gold Council, gold’s performance in 2024 was supported by strong investment demand, which increased by 25 percent over the year.

“Central banks remain key players, purchasing over 1,000 tonnes for the third consecutive year, reinforcing gold’s status as a strategic asset in an uncertain global landscape,” he told Arabian Business.

However, interest rates influence gold prices

“If investors seek safety, gold may be a hedge. Timing the market is difficult, so long-term investors should focus on diversification rather than short-term price movements,” Stuart Porter, a Dubai-based wealth coach and financial expert.

“Rising interest rates make gold less attractive as it pays no income, pushing prices down. Falling rates reduce the opportunity cost of holding gold, often boosting demand. Investors should consider their broader portfolio rather than basing decisions solely on rate movements,” Porter explained, adding that there is “no perfect price” when it comes to buying gold.

Despite this, gold demand in the Middle East has remained strong

“Regional investment demand has held near record levels despite fluctuations in global markets. Retail investors took advantage of price dips to build their holdings, and bar and coin demand remained strong, particularly in Saudi Arabia and the UAE. However, jewellery demand in the region softened due to high prices and international market dynamics, especially in the UAE, where Indian tourist demand was impacted by policy changes at home,” Naylor said, adding that he expects gold’s appeal as a safe-haven asset to strengthen further.

“Trade tensions and the potential for renewed inflationary pressures reinforce its role as a hedge against inflation and economic uncertainty. The market is very liquid, with over $200 billion of gold traded every day last year,” he added.

So, is it better to buy gold all at once or spread out purchases over time?

Porter advised investors to assess their financial goals and portfolio balance rather than aiming for a specific price. He also recommended spreading gold purchases over time rather than buying all at once.

“Spreading purchases over time, known as dollar-cost averaging, reduces the risk of buying at a peak. It smooths out price fluctuations and avoids emotional decision-making, which can lead to better long-term results,” Porter said, adding that many buyers make a few common mistakes when buying gold.

“Many buy based on fear or hype, chasing price spikes. Others try to time the bottom but miss opportunities. Gold should be part of a diversified portfolio, not a speculative bet,” he said.

However, assessing whether gold is overpriced or underpriced is challenging, Porter said. “Comparing gold’s price to inflation, interest rates, and historical trends can help. However, gold’s value is driven by sentiment and macroeconomics, making it difficult to pinpoint fair value. Investors should focus on long-term strategy rather than short-term valuation,” he said.

In addition, while gold has traditionally been seen as a store of value, Porter notes its role is being questioned. “The price of gold can be volatile, therefore it is not a guaranteed growth asset and offers no income. There is a cost to owning it, whether it is held in a bank or the additional insurance cost when holding it at home. It should complement, not replace, a well-diversified portfolio. Investors should consider why they want gold,” he concluded.