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Saudi's Public Investment Fund Takes $11 Bln in its First Loan

Buildings are seen in Riyadh, Saudi Arabia, March 1, 2017. REUTERS/Faisal Al Nasser
Buildings are seen in Riyadh, Saudi Arabia, March 1, 2017. REUTERS/Faisal Al Nasser
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Saudi's Public Investment Fund Takes $11 Bln in its First Loan

Buildings are seen in Riyadh, Saudi Arabia, March 1, 2017. REUTERS/Faisal Al Nasser
Buildings are seen in Riyadh, Saudi Arabia, March 1, 2017. REUTERS/Faisal Al Nasser

Saudi Arabia's sovereign wealth fund says it has taken its first loan, a $11 billion borrowing from global banks as it tries to expand its investments.

The Saudi Public Investment Fund made the announcement in a statement on Monday.

“This is the first step in incorporating loans and debt instruments into PIF’s long-term funding strategy,” the fund’s managing director Yasir al-Rumayyan said in a statement. He added that the PIF would “develop into one of the most prominent users of banking services in the region”.

The PIF, which is to play a leading role in Saudi Arabia’s drive to develop non-oil industries, said it would use the loan for “general corporate purposes”.

Saudi Crown Prince Mohammed bin Salman, Deputy Prime Minister and Minister of Defense, has talked about using the PIF to help diversify the economy of the Kingdom, which relies heavily on money made from its oil sales.

The PIF program outlines Saudi objectives in local and international investments that enable the diversification of the Kingdom’s sources of development and growth.

The three-year program (2018 until 2020) includes around 30 initiatives which set a goal to increase PIF's asset portfolio to SAR1.5 trillion ($400 billion) by 2020.

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Gold Jumps, on Track for Best Week in Over a Year on Safe-haven Demand

FILE PHOTO: Gold bullions are displayed at GoldSilver Central's office in Singapore June 19, 2017. REUTERS/Edgar Su/File Photo
FILE PHOTO: Gold bullions are displayed at GoldSilver Central's office in Singapore June 19, 2017. REUTERS/Edgar Su/File Photo
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Gold Jumps, on Track for Best Week in Over a Year on Safe-haven Demand

FILE PHOTO: Gold bullions are displayed at GoldSilver Central's office in Singapore June 19, 2017. REUTERS/Edgar Su/File Photo
FILE PHOTO: Gold bullions are displayed at GoldSilver Central's office in Singapore June 19, 2017. REUTERS/Edgar Su/File Photo

Gold prices rose over 1% to hit a two-week peak on Friday, heading for the best weekly performance in more than a year, buoyed by safe-haven demand as Russia-Ukraine tensions intensified.

Spot gold jumped 1.3% to $2,703.05 per ounce as of 1245 GMT, hitting its highest since Nov. 8. US gold futures gained 1.1% to $2,705.30.

Bullion rose despite the US dollar hitting a 13-month high, while bitcoin hit a record peak and neared the $100,000 level.

"With both gold and USD (US dollar) rising, it seems that safe-haven demand is lifting both assets," said UBS analyst Giovanni Staunovo.

Ukraine's military said its drones struck four oil refineries, radar stations and other military installations in Russia, Reuters reported.

Gold has gained over 5% so far this week, its best weekly performance since October 2023. Prices have gained around $173 after slipping to a two-month low last week.

"We understand that the price setback has been used by 'Western world' investors under-allocated to gold to build exposure considering the geopolitical risks that are still around. So we continue to expect gold to rise further over the coming months," Staunovo said.

Bullion tends to shine during geopolitical tensions, economic risks, and a low interest rate environment. Markets are pricing in a 59.4% chance of a 25-basis-points cut at the Fed's December meeting, per the CME Fedwatch tool.

However, "if Fed skips or pauses its rate cut in December, that will be negative for gold prices and we could see some pullback," said Soni Kumari, a commodity strategist at ANZ.

The Chicago Federal Reserve president reiterated his support for further US interest rate cuts on Thursday.

On Friday, spot silver rose 1.8% to $31.34 per ounce, platinum eased 0.1% to $960.13 and palladium fell 0.6% to $1,023.55. All three metals were on track for a weekly rise.