Can gold buyers anticipate a decline in prices akin to the previous escalation? That is the question UAE shoppers and investors are pondering after Dubai gold prices declined once more on Thursday morning, even as renewed US strikes against Iran elevated oil prices and reignited concerns regarding inflation, interest rates, and the forthcoming direction of bullion. At 10:07 am, the price of 24K gold was recorded at Dh489.75 per gram in Dubai, a decline from Dh490 on Wednesday. Meanwhile, the price of 22K gold decreased to Dh453.50 from Dh453.75. The adjustment was modest; however, it maintained prices beneath the thresholds observed earlier this month and returned 24K gold to precisely its starting point in July. Dubai gold prices commenced the month at Dh489.75 per gram for 24K, experienced a steady ascent to Dh503 on July 4 and July 5, before beginning to decline as global bullion momentum waned. Prices declined to Dh499 on July 6, Dh493.50 on July 7, Dh490 on July 8, and further to Dh489.75 on Thursday morning. For buyers, this indicates that the increase observed in early July has been completely negated, although prices continue to stay above the low of Dh485.25 noted on June 30. Gold experienced a downturn in global trade as markets assessed the implications of a second consecutive day of US strikes against Iran, rising energy prices, and the potential for prolonged elevated inflation. Bullion was priced at approximately $4,070 per ounce following a decline over the past three consecutive days.

The recent assaults followed US President Donald Trump’s assertion that he believed a ceasefire was “over,” while Tehran issued a warning of a significant retaliatory operation targeting US bases in the Middle East. Oil prices increased following the escalation, as Washington revoked a waiver that previously permitted Iran to sell crude oil on the global market. The concern for gold traders is that elevated energy prices may contribute to inflationary pressures, complicating the US Federal Reserve’s ability to ease monetary policy. Minutes from the Federal Reserve’s June meeting, released on Wednesday, indicated that several policymakers recognised a rationale for a rate increase, despite their consensus to maintain the current rates. Elevated borrowing costs typically exert pressure on gold, as the metal yields no interest. Source had earlier reported that gold’s crisis response has been notably more measured than many buyers anticipated, despite the metal’s enduring reputation as a safe haven during periods of global turmoil. In the recent phase of escalation in the Middle East, retail prices in Dubai exhibited significant volatility, with 24K gold prices rising from the Dh590 range in mid-February to surpass Dh636 by the end of that month, before subsequently easing and stabilising later. Analysts at the time indicated that the rally was being constrained by a stronger dollar, increasing yields, inflation concerns, and profit-taking following an extended bull run.

The same pattern is observable once more, albeit with a more measured price action. Safe-haven demand remains present; however, it faces competition from a robust dollar, shifting rate expectations, and ambiguity regarding the potential impact of the latest escalation on oil supply and inflation over the long term. Dilin Wu stated that gold is currently situated amid conflicting influences. “Gold is caught in a genuine tug of war right now — the upside is clearly capped, but the downside is contained too,” Wu said. On the bearish side, Wu noted that the renewed US-Iran escalation has driven oil prices higher, rekindling inflation concerns and shifting rate hike expectations towards a more hawkish stance. That reinstates the rate constraint on gold, as safe-haven flows persist in favouring the dollar over bullion. “But the bull case hasn’t disappeared either. The June NFP print was a serious challenge to the “resilient labour market” narrative, and it’s forced the Fed to at least reconsider the pace of tightening. Meanwhile, central bank buying — particularly from emerging markets — continues to provide a structural floor under prices over the medium term,” Wu said.

The subsequent trajectory for gold could hinge on whether the escalation significantly disrupts energy flows, thereby altering the inflation outlook. Wu indicated that two variables will dictate whether gold can establish its stability from this point onwards. The first factor to consider is the transit flows through Hormuz, as any renewed disruption has the potential to elevate oil prices and exacerbate inflationary pressures. The second event is the July 14 US inflation report and Kevin Warsh’s testimony before Congress. Markets anticipate a modest decline in headline inflation, projecting a decrease from 4.2% to 3.9%. A print below 4% would provide the Federal Reserve with greater flexibility to maintain its current stance, potentially aiding in the recovery of gold. Persistent inflation would result in higher yields, which would bolster the dollar and exert downward pressure on bullion. “My read: $4,000 to $4,200 is a highly uncertain trading range right now. Rather than taking a strong directional view, traders are likely waiting for more data confirmation before committing. CPI on the 14th is the moment of truth,” Wu said.

The current price of 24K at Dh489.75 is significantly lower than the levels observed on June 16 at Dh522.25 and June 18 at Dh509.25; however, it remains above the lows recorded in late June. That maintains buyers in a wait-and-watch stance, particularly those aiming to acquire jewellery or small bullion bars amid price corrections. A deeper fall would likely necessitate a stronger dollar, elevated yields, or a definitive indication that the demand for gold as a safe haven is diminishing. A rebound would necessitate either a cooler US inflation reading, a weaker dollar, renewed central bank demand, or a fresh escalation that markets perceive as a more significant macro shock. As of today, Dubai gold prices have retraced their early July gains, yet traders remain poised for the forthcoming data point that will determine whether the trajectory shifts toward $4,200 or reverts back to $4,000.