(MENAFN- The Arabian Post) Arabian Post Staff -Dubai

The Central Bank of the United Arab Emirates has boosted its gold reserves by about 32 percent in the first eight months of 2025, pushing the total value to AED 30.329 billion by end-August - a figure not seen before. The bank's gold holdings stood at AED 22.981 billion at the close of December 2024.

Between July and August alone, the value increased by more than 4.5 percent, climbing from AED 28.997 billion at end-July.

This accumulation comes amid broader growth in the UAE's banking sector. Demand deposits rose to over AED 1.188 trillion by August, up from AED 1.109 trillion at end-2024. Of the total, AED 892.273 billion was held in dirhams and AED 296.137 billion in foreign currencies.

Meanwhile, savings deposits reached AED 376.479 billion, divided between AED 321.761 billion in dirhams and AED 54.718 billion in foreign currencies. Over the same period, time deposits crossed AED 1.05 trillion, with AED 664.669 billion in domestic currency and AED 386.19 billion in foreign holdings.

Taken together, the gold and deposit figures point to sustained confidence in the UAE's monetary stability and liquidity. Analysts observe that central banks often expand gold reserves as a hedge against currency volatility and external shocks. A senior economist in the Gulf region noted that maintaining a diversified reserve portfolio“helps anchor investor sentiment, especially when global interest rate cycles remain unpredictable.”

Regional comparisons suggest the UAE is now positioning itself among Gulf peers with strong reserve buffers. While some central banks in oil-exporting states rely heavily on foreign currency reserves, the UAE's more aggressive accumulation of gold signals a strategic shift.

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Market observers caution that global gold prices remain volatile, influenced by U. S. Federal Reserve policy, inflation expectations, and geopolitical uncertainty. Still, the central bank's month-on-month accumulation in August implies it is moving forward despite price swings.

Within the domestic banking sector, the rising deposit base supports liquidity and lending capacity. Analysts anticipate that sustained deposit growth could underpin credit expansion going into 2026.

Across emerging markets, central banks have been facing tension between maintaining reserve diversity and managing opportunity costs-gold offers lower yield compared to sovereign bonds but is often valued for its role in preserving value. The UAE's decision to elevate its gold reserves suggests it is prioritising a buffer against external risk, especially in an environment of global financial uncertainty.

Also published on Medium .

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