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Demand for Gold Increases in Saudi Arabia

Increased demand for pure gold in Saudi Arabia (AFP)
Increased demand for pure gold in Saudi Arabia (AFP)
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Demand for Gold Increases in Saudi Arabia

Increased demand for pure gold in Saudi Arabia (AFP)
Increased demand for pure gold in Saudi Arabia (AFP)

The Saudi gold market is witnessing a stable supply amid increased demand, high market availability, and gold prices moving in unstable ranges due to the Russian-Ukrainian war.

Gold prices in Saudi Arabia returned to their levels three years ago, positively affecting the demand for purchase, especially on pure gold coins and bars, followed by refined gold pieces.

General Director of the Azzouz House for Gold and Jewelry, Mohammed Jamil Hashem Azzouz, told Asharq Al-Awsat that Saudi Arabia was one of the most stable countries during this war.

Azzouz indicated that the national economy proved its ability to face any repercussions and effects resulting from the Ukrainian crisis on the prices of commodities and minerals.

At the beginning of the Russian-Ukrainian war, gold witnessed noticeable declines due to fear and panic, but demand rose slightly, said Azzouz, adding that global prices continued to fluctuate.

In light of the increased demand in Saudi Arabia, Azzouz indicated that the demand percentage for yellow gold of high quality reached 70 percent, pointing out that the northern region is at the forefront in buying for "saving purposes," unlike the rest of the areas that buy gold for "adornment."

The price of a gram of 24 karat gold decreased to SR196.51, compared to SR197.01, while the cost of the most traded 21 karats reached SR171.95, and the gram of 18 karat gold fell to SR147.39 riyals from SR147.76.

The economic price of 14-karat gold reached about SR114.63, compared to SR114.92 on Tuesday, while the cost of 12-karat gold fell to about SR98.26, compared to SR98.51. The price of an ounce of gold was about SR6,112, while the price of a pound of gold of 21 carats amounted to about SR1,376.

Despite the recent fluctuations that swept the world due to the coronavirus pandemic and the Russian-Ukrainian war, Azzouz confirms that demand for gold is still much more potent than jewelry, especially after the concept of saving prevailed in the society.

He explained that gold is essential in times of need and fluctuations, placing the 24-carat coins and pieces at the top of demand in terms of market and savings, especially since any added tax does not cover it.

Azzouz noted that in second place comes golden items such as bracelets and bangles," which are pure without additives and do not carry an enormous manufacturing cost.

According to the Saudi financial system, the official explained that pure gold is not subject to taxes after the Zakat, Tax and Customs Authority exempted imported gold from value-added tax.

Gold is subject to tax at a rate of "zero" if its purity level is 99 percent and is tradable in the global market, while gold with a purity level of less than that is subject to a value-added tax of 15 percent, according to Azzouz.

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IMF: Middle East Conflict Escalation Could Have Significant Economic Consequences

Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
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IMF: Middle East Conflict Escalation Could Have Significant Economic Consequences

Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki

The International Monetary Fund said on Thursday that an escalation of the conflict in the Middle East could have significant economic ramifications for the region and the global economy, but commodity prices remain below the highs of the past year.

IMF spokesperson Julie Kozack told a regular news briefing that the Fund is closely monitoring the situation in southern Lebanon with "grave concern" and offered condolences for the loss of life.

"The potential for further escalation of the conflict heightens risks and uncertainty and could have significant economic ramifications for the region and beyond," Kozack said.

According to Reuters, she said it was too early to predict specific impacts on the global economy, but noted that economies in the region have already suffered greatly, especially in Gaza, where the civilian population "faces dire socioeconomic conditions, a humanitarian crisis and insufficient aid deliveries.

The IMF estimates that Gaza's GDP declined 86% in the first half of 2024, Kozack said, while the West Bank's first-half GDP likely declined 25%, with prospects of a further deterioration.

Israel's GDP contracted by about 20% in the fourth quarter of 2023 after the conflict began, and the country has seen only a partial recovery in the first half of 2024, she added.
The IMF will update its economic projections for all countries and the global economy later in October when the global lender and World Bank hold their fall meetings in Washington.
"In Lebanon, the recent intensification of the conflict is exacerbating the country's already fragile macroeconomic and social situation," Kozack said, referring to Israel's airstrikes on Hezbollah in Lebanon.
"The conflict has inflicted a heavy human toll on the country, and it has damaged physical infrastructure."
The main channels for the conflict to impact the global economy have been through higher commodity prices, including oil and grains, as well as increased shipping costs, as vessels avoid potential missile attacks by Yemen's Houthis on vessels in the Red Sea, Kozack said. But commodity prices are currently lower than their peaks in the past year.
"I just emphasize once again that we're closely monitoring the situation, and this is a situation of great concern and very high uncertainty," she added.
Lebanon in 2022 reached a staff-level agreement with the IMF on a potential loan program, but there has been insufficient progress on required reforms, Kozack said.
"We are prepared to engage with Lebanon on a possible financing program when the situation is appropriate to do so, but it would necessitate that the actions can be taken and decisive policy measures can be taken," Kozack added. "We are currently supporting Lebanon through capacity development assistance and other areas where possible."