Precious metal’s record-breaking rally reflects investor flight from bonds and currencies amid geopolitical turmoil and fiscal fears; silver and platinum also surge.
SHARJAH / DUBAI: Gold prices shattered a historic milestone this week, blasting through the $5,000-per-ounce barrier for the first time as deepening geopolitical and financial uncertainty sparked a massive global flight into safe-haven assets.
The relentless rally saw bullion surge as much as 2% on Monday to above $5,085 an ounce, driven by a weaker US dollar and intensifying concerns over soaring public debt and policy volatility in major economies. The surge has rippled directly through to UAE markets, with retail prices for 24-carat gold climbing to approximately Dh601 per gram, and 22-carat to around Dh556.50 per gram.
The “Debasement Trade” in Full Swing
Gold has now more than doubled in value over the past two years and is up over 17% year-to-date, a rally traders are calling the “debasement trade.” Investors are abandoning sovereign bonds and traditional currencies amid fears of fiscal unsustainability and are pivoting en masse to hard assets.
“Gold is the inverse of confidence,” said Max Belmont, a portfolio manager at First Eagle Investment Management. “It’s a hedge against unexpected inflation, unanticipated market drawdowns, and flare-ups in geopolitical risk.”
The surge is underpinned by a potent mix of factors: a sell-off in Japanese government bonds, mounting debt in advanced economies, political uncertainty in the United States, and escalating tensions from the Middle East to Venezuela and Greenland.
Broad-Based Precious Metals Boom
The rally extends well beyond gold. Silver recently crossed the $100-an-ounce threshold and advanced over 4% on Monday, buoyed by strong retail demand across Asia and the Middle East. Platinum also hit record highs, while palladium remained elevated, signalling a broad-based rush into metals valued for both industrial use and wealth preservation.
Institutional and Central Bank Demand Stays Strong
Institutional appetite remains robust. Western exchange-traded funds have added roughly 500 tonnes of gold since early 2025. Simultaneously, family offices and ultra-wealthy investors are increasingly turning to bullion for generational wealth preservation.
Central banks continue to be aggressive buyers. Goldman Sachs estimates that official sector purchases are averaging about 60 tonnes per month—well above pre-2022 averages—as emerging market monetary authorities diversify reserves away from paper currencies.
Forecasts Revised Upward
Analysts are rapidly raising their targets. Union Bancaire Privée projects gold could finish the year near $5,200 an ounce, while Goldman Sachs recently lifted its December 2026 target to $5,400, citing persistent macro and policy risks.
With speculation growing about potential Federal Reserve rate cuts under new leadership, the appeal of non-yielding gold as a portfolio diversifier remains potent. “Many of the current geopolitical and fiscal uncertainties aren’t going away soon,” noted a Dubai-based bullion trader. “Gold could stay in play for months, if not years, even after such strong gains.”
United Arab Emirates Dirham Exchange Rate
