The UAE Central Bank (CBUAE) has notably increased its gold holdings, highlighting gold’s strategic role in enhancing the nation’s financial reserves amid global economic uncertainties.
As per the regulator’s recent statistical report, the UAE’s gold reserves surged by 25.9% in the first five months of 2025, reaching Dh28.93 billion ($7.9 billion). On a monthly scale, the central bank noted a slight 0.49% rise in May, with reserves increasing to Dh28.79 billion from Dh28.65 billion in April. This steady growth reflects the regulator’s approach to diversify away from traditional reserves like the US dollar.
Experts believe that the central bank’s robust gold reserves provide both financial stability and strategic security for the UAE, the second-largest Arab economy. Gold’s role as a hedge against inflation and currency fluctuations makes it essential for reserves in times of uncertain monetary policies and ongoing geopolitical tensions.
Amidst global economic shifts—from slowing growth in developed markets to debates over fiscal sustainability—the UAE’s commitment to expanding its gold reserves enhances its economic resilience, experts noted. “Together with the banking sector’s momentum, the UAE is gearing up to handle global volatility while boosting investor confidence in its financial ecosystem.”
The CBUAE’s gold reserves growth coincides with strong expansion in the UAE banking sector. Demand deposits exceeded Dh1.16 trillion by May’s end, up from Dh1.10 trillion in December 2024, with Dh892.57 billion in local and Dh274.33 billion in foreign currencies.
Savings deposits also saw notable growth, reaching Dh359.57 billion from Dh317.48 billion in the same timeframe. Time deposits surpassed Dh1 trillion for the first time, with Dh614.85 billion in local currency and Dh398.35 billion in foreign currencies.
This growth propelled total banking sector assets, including bankers’ acceptances, to Dh4.75 trillion in April, a 0.6% increase, driven by strong credit demand and an influx of non-resident deposits, solidifying the UAE’s standing as a key regional banking hub.
Across the Gulf, banking performance has been varied. Kuwait saw a 6.7% year-on-year rise in total assets to 93.5 billion dinars ($303 billion) in March, while Saudi Arabia’s assets increased by 7.4% to SR5.3 trillion ($1.41 trillion) in April. Conversely, Qatar experienced a slight 0.1% monthly decrease in total assets to 2.07 trillion riyals ($559 billion), indicating weaker domestic demand.
The UAE’s continuous growth and strong gold reserves bolster its reputation as a resilient financial center in the region.
Globally, gold remains a focal point as investors seek safety amidst economic volatility. Spot gold concluded the week at $3,371.23 per ounce, up 1%, following Federal Reserve Chair Jerome Powell’s hint at potential rate cuts next month. Powell mentioned that despite inflation concerns, slowing economic activity and rising unemployment might justify monetary easing. “…With policy in restrictive territory, the baseline outlook and changing risks may necessitate policy adjustments,” Powell stated at the Fed’s annual symposium.
Analysts suggest his remarks could lead to easing in September, though not necessarily a prolonged series of rate cuts. The CME FedWatch Tool indicates markets are considering the possibility of two cuts before year-end.
Chris Zaccarelli, chief investment officer at Northlight Asset Management, said Powell’s comments imply the Fed acknowledges interest rates might be “slightly too high,” even as inflation risks persist. Others, like Jeffrey Roach, chief economist at LPL Financial, warn that beyond September, structural uncertainties could limit further cuts.
While gold’s short-term support has strengthened, the market remains within a range. Philip Streible, Chief Market Strategist at Blue Line Futures, anticipates adjustments following Powell’s comments but cautions against expecting an immediate breakout. FxPro’s chief analyst Alex Kuptsikevich added that gold is still in a consolidation phase, noting that both downside and upside risks are significant.
Capitalight Research’s Chantelle Schieven highlighted that although gold remains well-supported, its potential gains may be limited as markets have already priced in September’s rate cut. Commerzbank analysts agreed, noting that higher prices typically dampen retail demand.
Adding to the positive outlook, UBS increased its gold price forecast by $100 to $3,600 per ounce for March 2026 and by $200 to $3,700 per ounce for June 2026. The bank also set a target of $3,700 for September 2026, citing fiscal sustainability issues in the US, concerns over Federal Reserve independence, and broader geopolitical risks affecting the dollar’s dominance.
UBS forecasts exchange-traded fund inflows to reach around 600 tonnes in 2025, significantly higher than its previous projection of 450 tonnes, marking the strongest demand since 2010. The bank also predicts global gold demand to increase by 3% to 4,760 tonnes in 2025, the highest since 2011, with central bank purchases expected to remain high, albeit slightly below last year’s record levels.
