Gold prices yesterday dropped to their lowest level for the second time in almost a month, sparking a shopping frenzy at gold shops across the Kingdom.
The upcoming marriage season in Saudi Arabia and India is being cited as the reason for the rush of eager customers to gold shops, in addition to the fall in gold prices.
Gold traders are predicting that demand will increase as buyers opt to wait for further reduction in the next few days.
Affected by a stable dollar even as holdings in exchange-trade funds fell to the lowest in over four years, spot gold fell to as low as $1,360.55 an ounce yesterday, its lowest since April 18 when gold sold at $1,335. It raised questions on its viability as a safe haven in times of financial volatility. However, analysts predict that gold is still attractive and that despite recent price variations, the yellow metal continues to be perceived as a sound investment just as it has been over the centuries.
In Jeddah, the price of 22k-gold dropped to SR 154 per gram yesterday, down SR 4 from SR 158. However, the price varies among different shops with a difference of SR 2 per gram for 22k gold.
Unlike the last crash in April, where most sales were largely confined to 22k, this time, the sales of 21k have also become popular, as most Arab expatriates and Saudis buy the precious metal not only for occasions like weddings, where it is traditionally used to accessorize the bride’s boudoir, but also because it is considered a safe investment. Gold preferences vary. While Indians prefer 22k ornaments, thinking them to be “purer,” Saudi and Arab expatriates prefer 21k gold.
Abdul Ghafur, regional director of Malbar Gold, a leading jewelry group in the Gulf region, told Arab News that “it’s the right time to invest in gold.” He said the dip in gold prices had tripled gold sales over the past four weeks compared to the same period in the previous year. He also revealed that each outlet of his group is selling approximately 6 kg of gold ornaments every day since the dramatic fall in prices.
“Gold prices tend to be quite unpredictable; this is an opportune time to buy,” said Abdul Ghafur.
Vijayan, the sales manager at Atlas Jewelry in Jeddah, said gold shops have been experiencing up to a 100-percent jump in sales for the last few days.
Gold trader Ziyad Farsi said the “Saudi gold market is witnessing an increased rush almost after five years. It bodes well for Saudi traders that there is an increase in the demand for 21k gold.” The latest round of reductions in gold prices came as the World Gold Council reported that the global demand for gold had declined 13 percent in the first quarter due to a massive liquidation in exchange-traded funds, while demand for gold in the form of ornaments had risen 12 percent.
“Jewelry demand across the Middle Eastern and Indian markets experienced a revival in the first quarter,” the WGC report said yesterday.
Despite the losses, some investors have suffered, the latest drop in prices has proved to be a boom for gold traders who are experiencing a renewed surge in gold sales.