Gold prices in Dubai drop over Dh5 per gram amid rising US-Iran tensions

Gold prices dropped by over Dh5 per gram at the start of the week in Dubai on Monday morning as the US dollar strengthened amid renewed US-Iran tensions.

The 24K gold price fell Dh5.25 per gram to Dh577.00 per gram in Dubai on Monday, down from Dh582.25 per gram at the close of the market over the weekend.

Among the other variants of the yellow metal, 22K, 21K, 18K and 14K fell to Dh534.25, Dh512.25, Dh439.00 and Dh342.50 per gram, respectively.

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After opening lower, spot gold made some recovery and was trading up 0.39 per cent at $4,789 per ounce. Silver was also up, trading 0.67 per cent higher at $79.81 per ounce.

Rania Gule, senior market analyst for Mena at XS.com, said gold prices saw a notable decline, falling below the $4,800 level to around $4,775 during the Asian session at the start of the trading week.

“At first glance, this move appears contradictory given the escalating geopolitical tensions in the Strait of Hormuz. However, this decline does not reflect a fundamental weakness in gold’s status as a safe haven, but rather reveals a more complex shift in market dynamics, where geopolitical factors alone are no longer sufficient to drive prices higher in a restrictive monetary environment,” she said.

Gule added that the renewed closure of the Strait of Hormuz and Iranian authorities warning vessels to stay away represent a serious escalation that would traditionally push investors toward gold immediately.

“Yet, the market reaction this time has been different. I interpret this as investors becoming more sensitive to US interest rate policies than to geopolitical developments. With expectations that interest rates will remain elevated for longer, holding gold — which yields no return — becomes less attractive compared to interest-bearing assets. Therefore, I believe the key factor now is not the level of risk itself, but the opportunity cost of holding gold,” she added.