Gold prices surged to new highs in trading on Friday, with the precious metal continuing its record-breaking run, reaching $4,321.84 per ounce – its fifth-highest level ever. This strong rally was fueled by a daily gain of $42.21, representing a rise of nearly 0.96%, confirming the continued buying momentum and upward trend that has dominated global markets in recent weeks.
The impact of interest rate cuts and monetary policy
This exceptional performance of gold is a direct and immediate response to the interest rate cut announced last Wednesday. Historically, there is a strong inverse relationship between interest rates and gold prices; lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive to investors compared to bonds and treasury bills, whose yields decline in a low-interest-rate environment. The significant drop in bond yields has prompted major investment portfolios to increase their positions in the precious metal to maximize capital gains.
Gold as a safe haven amid global concerns
In addition to monetary factors, psychological and macroeconomic factors play a pivotal role in this surge. With growing concerns about a global economic slowdown and the possibility of recession in some major economies, gold is resuming its traditional role as the primary "safe haven." Investors and central banks are accumulating gold to hedge against currency volatility and economic uncertainty, creating physical demand that supports prices at elevated levels.
Gold prices in the Saudi market
This global price increase was directly reflected in the local market in Saudi Arabia. According to current prices, a gram of 24-karat gold (pure gold) is priced at approximately 521.12 Saudi riyals. This karat is usually traded in the form of gold bars for investment and savings. A "stamping" fee, which varies depending on the weight of the bar and the producing company, is added to this price.
As for the most popular type of gold jewelry in the Kingdom, the price of a gram of 21-karat gold reached approximately 456 riyals. Consumers should note that the final price for this karat includes the cost of manufacturing, the merchant's profit margin, and value-added tax (VAT), making the final price for the buyer higher than the price of the raw material. Regarding 18-karat gold, which is known for its modern designs, the price per gram reached approximately 391 riyals and is also subject to the same additional costs of manufacturing and VAT.
