United Arab Emirates Gold Price Update: Impact of Russia-Ukraine Peace Deal on the Market

Introduction

Gold prices in the UAE recently increased amid speculation regarding ongoing peace talks between Russia and Ukraine. Gold is typically viewed as a safe-haven asset, whether it is a result of geopolitical changes, economic data releases, or general market sentiment. It is mostly viewed as a hedge in times of inflation, currency deflation, or general financial uncertainty, making it often an asset of choice in times of uncertainty. Over the last few months, many developments have taken place across the globe, including diplomatic talks aimed at finally ending the long-standing Russia-Ukraine conflict, and many central banks reversing their monetary policies significantly and adding more liquidity to the system, all of which have significantly affected gold demand and pricing. This blog will reflect what gold pricing has done in the UAE in the recent past, explore some of the underlying reasons for the movements, and what investors should be on alert for in a new and shifting geopolitical and economic environment.

Current Gold Price Trends in the UAE

August 20, 2025, gold prices in the UAE increased to 392.10 AED per gram from the previous AED 391.55 per gram. The price per tola also increased to AED 4,573.33. Throughout the markets on August 20, pricing movements were largely indicative of market participants' perceptions of value in light of significant geopolitics and economic impact on monetary actions; the increase in price of gold was driven largely by limited safe haven demand, resulting from renewed optimism regarding the Russia - Ukraine peace negotiations, although the new developments left investors cautiously optimistic. In addition to implications from the politics influencing price movements, fluctuation in the US Dollar had a major influence, as a weaker US Dollar increases gold's appeal as a hedge against currency depreciation. Furthermore, price movements were influenced by expectations in the markets regarding Federal Reserve monetary policies; increasing direct and indirect interest rates will also increase the price of gold. Overall, the gold market is moved by a multitude of competing geopolitical and economic factors that can result in price volatility

Geopolitical Influence: Russia-Ukraine Peace Effort

The continuing diplomatic discussions involving Russian president Vladimir Putin, Ukrainian president Volodymyr Zelensky, and international participants have created hope for a resolution of the conflict. Zelensky called recent diplomatic developments "a major step forward" that would potentially reduce the premium on safe-haven assets (such as gold) and possibly stabilize the region. There remains a cautious optimism from investor sentiment, which has led the markets to react to any positive news regarding peace discussions. However, the military engagements have not abated, as evidenced by the frequent Russian missile and drone strikes, which create an uncertainty/volatility that revolves around the potential resolution. The current can't operate in unison, maintaining the space for gold to be a refuge during geopolitical instability and sustaining the watchful eye of investors as regional developments fluctuate.

US Dollar Strength and Federal Reserve Policy

Gold prices are also subject to fluctuations in the US Dollar. As markets recalibrated expectations about Federal Reserve interest rates, the Dollar appreciated significantly. Inflation readings pushed down expectations for deeper rate cuts on the horizon and therefore supported a stronger Dollar. Since gold is priced in USD, a stronger dollar generally means downward pressure on the price of Gold. Higher interest rates also increase the opportunity cost to hold non-yielding assets like gold, and also work against the price. Political dynamics around former President Donald Trump are also complicating the Fed's position by asking for larger cuts in rates. Fed Chair Jerome Powell remains guarded as he attempts to balance inflation and growth. There are a number of potential catalysts for change in current markets, including the Fed's policy minutes, as well as Powell's public presentations. These developments are scheduled to provide clues regarding the potential direction of monetary policy and the degree of impact on regional and national gold markets.

Gold as a Safe-Haven and Inflation Hedge

Gold remains a preferred asset for hedging against inflation and currency depreciation, particularly in times of uncertainty. There has been a sizable uptick in central bank gold reserves among emerging markets such as China, India, and Turkey as these banks are looking to increase financial stability, strength, and potentially increase reserves. The World Gold Council notes that the world's central banks purchased an estimated 1,136 tonnes of gold in 2024 alone, the highest level ever for annual purchases. These purchases reflect the future positioning of country reserves as they try to diversify among currencies when facing an uncertain global economy. Gold also serves as part of diversification strategies that hedge a person's portfolio against inflation and retain value compared to the stock market falls typically observed in weak stock market conditions. Gold's inverse relationship with the US Dollar increases its importance in attempted diversification strategies to mitigate risk and preserve wealth over time in global portfolios.

Conclusion

The UAE gold market will continue to reflect both geopolitical and US monetary trends and movements in various currency values; the optimism surrounding peace talks between Russia and Ukraine could suggest lower levels of safe-haven demand for gold. Notwithstanding that, global strife and the uncertainty related to markets at that time will mainly drive market volatility. Investors could well heed the pace of diplomatic developments around Ukraine and signals from the Fed, as indicators impacting gold prices in the near term. According to Spherical Insights, ongoing fluctuations in raw material costs and evolving supply chain dynamics also play a significant role in shaping gold’s price trajectory, adding an additional layer of complexity to market forecasts.

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