How UAE Investors Are Navigating Gold and Forex Markets in 2025

Gold Investing 

Market Performance: Gold prices have experienced a significant surge, reaching approximately $2,900 per ounce as of February 2025, driven by robust demand and favorable market conditions. 

Farah Mourad, senior market research analyst at Equiti Group, says: “The strong demand is clearly carrying over into 2025, following central banks’ massive purchase of 1,045 tonnes of gold in 2024, the third year in a row they’ve added over 1,000 tonnes, far above the long-term average. 

“If they keep this pace, it’s a strong vote of confidence in gold’s value and could help keep prices steady. Meanwhile, if the US decides to revalue its gold reserves, especially with doubts swirling about how much they actually hold, it could set off a major market reaction, drawing in more investors and sending prices even higher.”

Price Forecasts: Analysts project that gold prices may climb to $3,000 by the end of the year, with potential to reach $3,400, influenced by factors such as geopolitical tensions and central bank policies. 

“After the latest recovery from $2,955, some in the market might wonder if gold is overvalued. However, the rebound seems more like a reaction to a sharp drop in US markets, which temporarily pushed demand for cash. As the dust settles, gold’s role as a hedge is coming back into focus,” Farah Mourad, senior market research analyst at Equiti Group, says. 

“Despite record highs, gold might still be undervalued when you consider the expanding money supply. The ratio of gold to the money supply has dropped to just 0.13 – only 30% of what it was in 1980. This suggests that gold’s current price might have much more room to rise, especially if inflationary pressures persist and central banks keep diversifying their reserves,” she adds. 

Investor Sentiment: The precious metal’s appeal as a safe-haven asset remains strong amid global economic uncertainties, prompting both individual and institutional investors in the UAE to increase their gold holdings.

Ahmed Azzam, Regional Financial Market Analyst at Equiti Group says: “Central banks added 18 metric tons of gold to reserves in January, extending a multiyear trend of strategic buying amid geopolitical and economic uncertainty. Their approach remains disciplined: purchasing during price dips while keeping sales minimal and tactical. 

“Since 2022, this pattern has intensified as institutions prioritise gold’s stability against shifting risks – from geopolitical tensions to trade tensions – reinforcing its role as a cornerstone of reserve management,” he adds. 

Forex Investing

Market Expansion: The Middle East’s online trading industry is on a rapid growth trajectory, projected to reach a value of $1 trillion by 2025, with the UAE playing a central role.

Brian Myers, Chief Commercial Officer at Equiti Group, says: “In recent years, the UAE has emerged as a hub for the online trading industry, attracting top talent from across the sector. The Middle East is one of the few regions in the world where client numbers are expanding rather than contracting. The growth is impressive and shows little sign of slowing.”

Investor Strategies: Traders are focusing on major currency pairs like EUR/USD and USD/JPY, capitalizing on market liquidity and volatility. The divergence in monetary policies and economic performance across regions is creating trading opportunities.

“When central banks dance to different tunes – some hiking rates, others cutting – traders have great opportunities. Recently, EUR/USD and USD/JPY have been attracting a lot of attention due to this exact divergence. The Fed’s cautious stance versus the European Central Bank’s steady approach created volatility in EUR/USD, offering traders opportunities to capitalise on short-term moves,” Farah Mourad, senior market research analyst at Equiti Group, says. 

Meanwhile, the stark contrast between the Bank of Japan’s ultra-loose policies and the Fed’s tightening bias has made USD/JPY a hotspot for traders seeking to leverage the volatility. This divergence isn’t just a buzzword; it’s the rhythm driving forex markets right now,” she adds. 

Ahmed Azzam, regional financial market analyst at Equiti Group also shares: “Traders have been divided in their choices between the USD/JPY and EUR/USD pairs and others, reflecting the diverging monetary policies of the three major economies. The Federal Reserve cut interest rates three times in the last quarter of 2024, totalling a 1% reduction. Meanwhile, the European Central Bank continued its easing cycle with a sixth consecutive rate cut, whereas the Bank of Japan raised rates three times, moving away from negative interest rates.”

“Each central bank adjusted its monetary policy and provided forward guidance based on economic conditions – whether inflation was nearing the 2% target or concerns over economic slowdown prevailed. Additionally, US tariffs added another layer of uncertainty, making the US dollar a key driver in currency movements. Market sensitivity to inflation risks and growth concerns fuelled volatility, pushing the EUR/USD pair up by 6% since the start of the year, while the USD/JPY pair declined by approximately 6.6%,” he adds.