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After gold's big correction, is it time to buy again?
After retreating sharply from record highs earlier this year, gold is rebounding as UAE investors weigh what comes next for the precious metal
- PUBLISHED: Fri 11 Sept 2026, 8:00 AM
Gold investors have had plenty to think about this year. After a powerful run pushed the precious metal to record highs in early 2026, prices pulled back sharply in the months that followed, testing the confidence of investors who had turned to one of the world's oldest safe-haven assets. The correction was substantial enough to shift the conversation from how high gold could go to whether the drop had created another opportunity to buy.
The picture has shifted again in recent weeks, with gold prices rebounding. The recovery has been supported by a weaker US dollar, movements in bond yields and renewed investor interest, while uncertainty over interest rates and geopolitics continues to influence the market.
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Yet the pullback earlier in the year did little to weaken investment demand. According to the World Gold Council, the average gold price in the second quarter stood at $4,506 an ounce, 8% below the record average reached in the first quarter but still 37 % higher than a year earlier. Global bar and coin demand reached 784 tonnes in the first half of 2026, one of the strongest first-half performances on record.
The UAE stands out within that picture. Bar and coin investment demand increased 30% year-on-year in the second quarter, with safe-haven buying and bargain hunting during the price correction helping to support demand. The World Gold Council expects investment to remain the main driver of global gold demand growth through the remainder of 2026.
For UAE investors, the recent swings in gold prices have brought the focus back to whether this is still a good time to invest, and what could drive the market next.
Buying After The Pullback
For investors considering gold after this year’s correction, analysts say the focus should extend beyond short-term price movements.
“Gold has reminded investors this year that even a safe haven can be anything but safe in the short term,” said Josh Gilbert, eToro Lead Analyst, APAC and Middle East.
Gold hit a record $5,595 an ounce in late January before losing almost 30% of its value and subsequently recovering to around $4,600. Gilbert said the correction provided long-term buyers with a better entry point, with money flowing back into gold ETFs over the past fortnight.
For longer-term investors, however, he believes the focus should be less on finding the perfect entry point.
“Time in the market matters more than timing,” Gilbert said.
“GLD, one of the world’s largest gold ETFs, has still delivered a 151% total return over five years. That is why investors hold this asset for years rather than trying to time every move.”
The underlying demand for gold is also important when looking beyond its short-term price movements.
Darren Clarke, Trader at Lunaro Financial Services Limited, pointed to the return of ETF investors in July and renewed central bank buying after a quieter first quarter as signs of continued demand.
“This year alone shows it's not one-way — near $5,600 in January, under $4,000 by June, rebuilding since,” Clarke said. “What's held up through that is real buying: ETF investors returning in July, central banks back after a quiet first quarter. That's a better signal than any single forecast.”
For investors deciding whether to buy now or wait for another pullback, Clarke said there is no single answer. One way to manage the uncertainty is to build exposure gradually rather than trying to identify the bottom of the market.
“Buying strength versus waiting for a dip is a matter of approach, not a settled call — but spreading purchases over time, rather than committing it all at once, reduces the risk of getting a single entry point wrong,” he said.
Recent developments in the US have meanwhile provided further support for gold.
Aliasgar Tambawala, Co-CIO at Klay Group, pointed to the US Treasury’s announcement that it would buy longer-dated US government bonds, alongside expectations around the Federal Reserve’s next moves.
“The announcement by the US Treasury to buy longer-dated US Government bonds has had a positive impact on Gold prices, as seen by the move in gold prices over the last week,” Tambawala said. “The FED being on hold for the next couple of meeting also is positive for gold prices.”
What Could Move Gold Next
The outlook for the rest of the year will depend heavily on the direction of US interest rates, the dollar and inflation, while geopolitical uncertainty remains another factor for investors to watch.
Gilbert described the months ahead as a “tug of war between high real yields and growing unease about the dollar and US government debt”.
“Gold normally struggles when bond yields rise, because it pays you nothing to hold it, yet it has stayed firm even with long-term borrowing costs elevated,” he said.
“Investors are looking past interest rates and starting to question the credibility of US fiscal policy.”
Inflation could complicate that picture. If price pressures remain elevated, particularly due to energy prices and geopolitical tensions, Gilbert said the Federal Reserve could be pushed towards raising rates, which would lift yields and potentially strengthen the dollar.
Interest rates will therefore remain one of the biggest influences on gold. Clarke said: “Rates lead — a hold helps gold, a hike doesn't, and the Fed's genuinely split.”
Inflation itself can work both ways. While gold has traditionally been viewed as a hedge against rising prices, persistent inflation that leads to higher interest rates can weigh on the metal. “Inflation cuts both ways: it supports gold as a hedge, but if it pushes the Fed toward hiking, rising yields can outweigh that,” he added.
The US dollar adds another variable. Clarke noted that the dollar and gold can both attract safe-haven flows during periods of geopolitical uncertainty, meaning they can sometimes compete for the same investor demand.
“The dollar's also a safe-haven asset, so it's held up through the same geopolitical tension that's supported gold — the two have been competing for some of the same flows, which has capped gold's gains at points,” he said. “Further escalation could still favour either asset depending on which channel dominates.”
Beyond short-term price movements, Clarke pointed to ETF and central bank flows as a steadier indicator of underlying demand.
Tambawala also expects developments in the US to remain central to gold’s direction through the rest of 2026.
“The actions of the US Treasury and Fed over the rest of the year will be among the factors influencing gold prices,” he said. “The interplay between how rates — on the short-end and long-end of the US Treasury curve — and the US dollar move will guide how gold prices react.”
Does Gold Still Belong In The Portfolio?
Despite the sharp swings in prices this year, gold’s longer-term role as a portfolio diversifier remains intact.
Gilbert said gold has been a staple in portfolios for decades and continues to have a place as a long-term diversifier, even after a volatile year. For UAE investors, he said the dirham’s peg to the US dollar makes that role particularly relevant, while continued central bank buying and the return of ETF investors provide further support. “What this year showed, though, is that a safe-haven label does not buy you a smooth ride,” Gilbert said. “Gold’s job is to provide balance, not to be the best-performing asset every year.”
Clarke also believes the diversification case remains unchanged, pointing to renewed buying from central banks and ETF investors. But this year’s correction has demonstrated that gold can fall sharply as well as rally, making the timing of an investment an important consideration. “As with any purchase this size in the cycle, spreading it out over time reduces the risk of getting that timing wrong, rather than committing everything at once,” Clarke said.
For Tambawala, gold’s longer-term appeal also lies in its ability to provide protection against the impact of rising government debt and deficits on currencies. “Gold is a good source of diversification and a hedge against monetary debasement, which continues as countries issue more debt and run higher deficits, impacting the nominal value of global currencies,” Tambawala said.
Physical Gold or ETFs?
For investors who decide to add gold to their portfolios, there are several ways to gain exposure. Physical gold, ETFs, digital platforms and gold-mining shares offer different routes, each with its own costs, risks and level of convenience.
Gilbert said the right option ultimately depends on what an investor wants gold to do for them. Physical gold, including bars, coins and jewellery, provides outright ownership — something that carries particular weight in the UAE given gold’s deep cultural roots. But there are practical costs to consider.
“The trade-off is storage, insurance, dealer premiums and wider spreads when you come to sell,” Gilbert said.
For most investors, he believes ETFs offer an easier route. They can be bought and sold during the trading day, provide greater transparency around costs and can sit alongside other investments in a portfolio without the logistics associated with owning physical gold.
Gold-mining shares, however, carry additional risks because their performance is not determined by the gold price alone. Gilbert said that while they can rise faster than bullion when gold prices increase, investors are also taking on “management decisions, production costs and whatever the wider share market is doing that week.”
Clarke similarly said the choice should depend on the purpose and size of the investment. While physical gold offers direct ownership, storage and insurance become more important as the value held increases. ETFs, meanwhile, offer same-day liquidity without requiring investors to store the metal themselves.
Digital platforms provide another option, allowing investors to buy fractional amounts while the underlying metal is held by the provider. Mining funds add company-specific risks on top of movements in the gold price.
“No single right answer; the vehicle should match the amount, not the other way around,” Clarke said.
For investors prioritising convenience and cost, Tambawala pointed to ETFs as an effective way of gaining exposure to the precious metal.
“Investors should also consider factors such as fees, liquidity, custody arrangements, and the structure of the product when considering different forms of gold exposure,” Tambawala said.
As a passionate storyteller and content writer, Kushmita Bose loves weaving narratives that inform, inspire, and entertain. Whether she's unraveling tech revolutions, dissecting industry reports, or bringing a brand’s journey to life, Kushmita thrives on transforming ideas into captivating stories. When she’s not busy crafting content, you’ll probably find her daydreaming about her next travel adventure.