Gold Rebounds After Historic Plunge As Dubai Market Braces For Fresh Volatility

2026-02-02 04:44:24

(MENAFN- Khaleej Times) Gold and silver staged a sharp rebound at the start of the week after suffering their steepest single-day crash in more than a decade, underscoring the extreme volatility gripping global precious metals markets and spilling over into the UAE's bustling bullion trade.

Spot gold climbed about 1 per cent in early Asian trading after tumbling nearly 4 per cent in the previous session, while silver surged more than 8 per cent after briefly sliding almost 12 per cent. The violent swings followed an extraordinary rally that pushed both metals to record highs, fuelled by geopolitical tensions, currency erosion fears and heavy speculative positioning.

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In the UAE, where physical demand often mirrors global price momentum, international spot gold trading around $4,650 to $4,750 an ounce translates to roughly Dh17,000 to Dh17,450 per ounce at current exchange rates. Local retail quotes remain higher after dealer premiums, with a pure gold ounce changing hands near Dh17,400 to Dh17,800, traders said.

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Silver, which has been more volatile because of its industrial exposure, has been fluctuating around $75 to $85 an ounce, equivalent to about Dh275 to Dh315 per ounce in the local bullion market.

Dubai's retail prices continue to reflect the elevated global backdrop. Twenty-four carat gold has been trading in the range of Dh560 to Dh590 per gram, while 22-carat gold is quoted between Dh520 and Dh545 per gram. Twenty-one carat gold has hovered near Dh500 to Dh525 per gram, keeping jewellery demand subdued as shoppers wait for clearer price signals.

The sharp correction marked a turning point after a relentless rally that saw gold surge past $5,500 an ounce and silver spike above $120. Investors piled into precious metals earlier this year as geopolitical risks escalated, central banks maintained strong buying programmes and doubts lingered over the long-term stability of major currencies.

The sell-off was triggered by a rebound in the US dollar, which tends to pressure dollar-priced commodities by making them more expensive for overseas buyers. Broader weakness across global equity markets added to the risk-off mood, while renewed uncertainty over US monetary policy prompted investors to unwind leveraged positions in futures and options markets.

Inflation data from the US has complicated the outlook. Producer prices rose at their fastest pace in five months, reinforcing expectations that price pressures remain sticky and giving the Federal Reserve room to keep rates steady in the near term. At the same time, markets continue to price in at least two rate cuts later this year - a scenario that would typically support gold, which offers no yield but becomes more attractive when real interest rates fall.

Derivatives trading has amplified the price action. According to Goldman Sachs, a surge in call-option buying mechanically reinforced the rally, as option sellers hedged rising exposure by purchasing the underlying asset. That feedback loop accelerated gains - and later intensified losses when sentiment reversed.

Analysts say gold's longer-term fundamentals remain intact despite the turbulence. Central bank accumulation, geopolitical uncertainty and hedging demand from institutional investors continue to provide structural support. Some market strategists expect prices to trend higher over the medium term, even as short-term volatility persists.

Silver's outlook is less clear. Its dual role as both a precious and industrial metal makes it more sensitive to global growth signals, manufacturing demand and changes in margin requirements on futures exchanges, which have recently added pressure to prices.

In Dubai, traders report cautious behaviour among buyers. Many investors are opting for staggered purchases rather than lump-sum allocations, aiming to average costs amid unpredictable price swings. Physical jewellery demand has softened compared with the peak buying season, as households track global markets before committing to big-ticket purchases.

Attention now turns to a packed calendar of global economic data, including manufacturing PMI releases from China, Europe and the United States, which could offer fresh clues on industrial demand and broader economic momentum. Any renewed geopolitical flare-ups or sharp moves in the dollar are also likely to have an outsized impact on bullion.

Traders said gold's rebound offers only limited relief after one of the most dramatic sell-offs in decades. In Dubai's gold market, where investment flows and consumer demand intersect, traders expect choppy conditions to persist - keeping prices elevated, volatility high and sentiment finely balanced.