Gold prices dropped to a three-and-a-half-week low on April 7, 2025, despite heightened economic uncertainty globally. Spot gold fell 0.1 per cent to $3,034.02 an ounce, following a 3 per cent drop on April 4. The surprising dip comes amid fears of a global recession sparked by aggressive U.S. tariff policies.
Gold traditionally serves as a safe-haven asset during market instability. However, recent declines suggest that investors may be liquidating their gold positions to cover losses elsewhere or preserve liquidity.
Why is Gold Dropping?
•Investors are choosing cash or dollar-based assets over gold in the current downturn.
•Institutional traders are reallocating funds from safe-haven assets to rebalance portfolios amid broader equity losses.
•Stronger dollar performance is weighing down demand for gold, particularly from non-U.S. buyers.
Relevance to the UAE Market
The UAE remains one of the top global hubs for gold trading, with Dubai’s Gold Souk, DMCC, and various bullion platforms facilitating both retail and institutional activity.
•Gold retailers in the UAE have seen a slight pause in buyer activity this week, though long-term demand is expected to remain steady during Eid and seasonal gifting periods.
•Institutional investors in DIFC and ADGM may view the current price dip as a short-term aberration rather than a reversal of long-term trends.
Gold’s position as a wealth-preserving asset in the UAE remains strong, especially among high-net-worth individuals and family offices seeking to hedge against currency risk and global uncertainty.
