Gold's 16% surge in 2025: Should you hold or sell?

27/03/2025 05:44 AST

Gold has been on an unstoppable rally in 2025, surging more than 16% since the start of the year and recently breaking past $3,000 per ounce-well ahead of previous forecasts. This milestone has left investors debating whether to sell and lock in profits or hold in anticipation of further gains.

Meanwhile, gold buyers in the UAE face the dilemma of whether to wait for a potential price dip or purchase before prices climb even higher.

In the UAE, the 24-karat gold price rate was at Dh363.25 per gram on Wednesday evening, tad higher than last night's closing rate of Dh363. Similarly, 22-karat, 21-karat and 18-karat also inched higher at Dh336.50, Dh322.50, and Dh276.50 per gram, respectively. Check the latest rates here.

What's fueling gold's record-breaking rally?
The latest surge in gold prices has been driven by several key factors: rising inflation concerns, expectations of global interest rate cuts, and escalating geopolitical tensions. Central banks worldwide have also been increasing their gold reserves, further strengthening demand.

Warren Patterson and Ewa Manthey, commodity analysts at ING, explained gold's rise: "Gold has rallied more than 16% this year as escalating trade actions bolstered safe-haven buying. Uncertainty over global trade policies and tariffs continues to buoy gold prices."

This sentiment is echoed by analysts who see gold benefiting from an uncertain macroeconomic environment. Natasha Kaneva, Head of Global Commodities Strategy at J.P. Morgan, noted: "We maintain our multi-year bullish outlook on gold. From a macro perspective, a universal tariff scenario would likely supercharge the broad price effects for precious metals."

With gold breaching $3,000 earlier than expected, the key question now is: will it keep rising, or is a correction overdue?

Will gold keep climbing or stabilise?
Some analysts believe gold's current levels could lead to a period of stabilization, with short-term profit-taking possibly causing slight pullbacks. "Following a significant rally, markets often undergo periods of consolidation. The substantial gains in 2024 and early 2025 may lead to profit-taking and a temporary cooling in price momentum," said Brody Dunn, an investment manager at a UAE-based asset advisory firm.

However, others argue that gold could continue climbing, especially if central banks proceed with expected interest rate cuts. Lower rates reduce the opportunity cost of holding gold, making it even more attractive as an investment.

April LaVine, a Dubai-based precious metals retail analyst, highlighted the scale of the recent price movements: "In 2024, gold prices surged by a mammoth 27% to reach around $2,617 per ounce. However, 2025 has already exceeded expectations, with prices now above $3,000-surpassing earlier projections well ahead of schedule."

What this means for UAE buyers and investors
For gold shoppers, the recent spike presents a tough choice: buy now before prices rise further or wait for a potential correction?

LaVine noted, "While UAE consumers can anticipate further increases in local gold prices, this year's surge has already outpaced last year's gains. This could mean a period of relative price stability ahead, offering shoppers a less volatile market for purchases."

If gold continues its upward trajectory, UAE buyers may have limited opportunities to purchase at lower prices. However, if markets enter a consolidation phase, gold rates could stabilize, allowing for better buying conditions later in the year.


Sell or Hold? The Investor's Dilemma

For investors, the decision to sell or hold depends on individual risk tolerance and investment goals:

Short-Term Investors: If you've already gained from the rally, now may be a good time to lock in some profits. "Gold remains well-positioned to hedge against macro uncertainty, particularly as global policy shifts unfold in the coming months," said Gregory Shearer, Head of Base and Precious Metals Strategy at J.P. Morgan.

Long-Term Investors: If you view gold as a store of value and an inflation hedge, holding could still be a solid option. While short-term pullbacks may occur, gold's fundamentals remain strong, and some analysts believe new record highs are possible if global economic uncertainty persists.

Will there be more buying opportunities?
For UAE gold shoppers, the rapid surge in prices has created uncertainty. Unlike 2024, when prices climbed steadily throughout the year, 2025's sharp rise has left little room for gradual accumulation. However, if markets enter a consolidation phase, buyers may get a chance to make purchases at slightly lower rates.

The relative stability of gold prices moving forward will be especially beneficial for those purchasing jewelry for weddings, festivals, or long-term investments, as they can plan their purchases with more confidence.

Bottom Line
Gold has already surpassed the $3,000 milestone this year, exceeding earlier expectations. While some analysts anticipate further gains, others warn of potential stabilization and short-term pullbacks.

For investors, the decision to sell or hold should be guided by their financial goals and market outlook. Meanwhile, UAE gold buyers may have to weigh whether to buy now or wait for possible dips in what has been an unpredictable yet rewarding gold market.

Gulfnews