Top 6 Factors That Affect Gold Rate in the UAE

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Gold is one of the most precious selling metals of all time. Gold as a commodity has a rich history and value that is interwoven into cultures and traditions. In various cultures gold is considered sacred and is offered to lord and demigods, people believe that it is a carrier of good luck and fortune. Apart from having ornamental value gold is an important financial tool that can help overcome phases of financial instability. Traditionally, there is always an increase in the demand for gold and its products during the wedding season and festive season which causes the gold rate in UAE to rally.

Most of us are aware of the fact that the prices of gold are highly dynamic and keep on changing every day. But ever wondered why the price of gold is dynamic? Multiple factors affect the gold rate in the UAE and across the globe. In this thread, we’ll share some of the factors that affect the gold price in the UAE directly or indirectly. Here’s the list goes:

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Gold has a quite steady character from the financial perspective; this unique feature gives it the ability to provide a hedge against inflation. And, for this reason, a lot of investors prefer holding gold as an investment rather than currency. This, in turn, leads to an increased demand of gold during inflation and vice versa. Further, an increase in the demand is followed by an increase in the price of gold. The scenario is not just limited to UAE but has been observed globally.

Global Movement

Movement in the global prices of gold affects the gold rate in the UAE. This is because the UAE is one of the largest sellers of gold globally. Therefore, any change in the international rates impacts the domestic market as well.

Government Gold Reserves

Central banks of nearly all major countries tend to hold currency as well as gold reserves. The gold prices rise when the central banks of large countries start holding gold reserves. This is mainly because the cash flow in the markets increases, and at the same time the supply of gold drops.

Jewelry Market

Every year during the wedding season and festive season the demand for gold and its products increases. This, in turn, leads to a mismatch in the supply and demand of gold in the market causing the gold rate in UAE to shoot up.

Interest rates applicable to financial products are related very closely with the demand of the metal. Current gold rates in UAE are good indicators of trends in interest rates. When the rate of interest increases people start selling gold to acquire cash. With this increased trading of gold, the supply of gold in the market rises. This, in turn, causes the gold rate in the UAE to decrease.

Value of International Currency

Under normal circumstances, gold prices and the value of international currencies share an inverse relationship. Since the price of gold in the international market is largely dependent on USD, any change in its value will affect the rate of gold in the UAE.


Apart from the factors listed in the article above, some other similar factors that may influence the gold price in UAE are geopolitical instability, production of gold, mining activities, etc. However, the ultimate factor around which the price of gold in UAE is centered is the demand and supply flow. According to some recent statistics from the world gold council, the demand for gold is approximately 1000 tons more than that is supplied.. Most of the gold in the market is recycled. A disturbance or mismatch in the demand or supply of gold is the primary reason behind the changes in the prices of gold.

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