Gold Price in Saudi Arabia: Influencing Factors and Recent Developments

The gold price is defined as the financial value of a specific weight of pure gold, often measured globally in ounces (31.1035 grams). The price is determined in international markets through daily trading on precious metals exchanges, such as the New York Mercantile Exchange (COMEX) and the London Bullion Market (LBMA). These prices depend on global supply and demand, with real-time updates linked to currency fluctuations and economic events. In Saudi Arabia, the price per ounce is converted to Saudi riyals, and the price per gram for different carats (24, 21, 18 karats) is calculated, with 24-carat being the purest and most commonly used for investment and bullion. Manufacturing costs and profit margins are added to the raw gold price when sold as jewelry, along with value-added tax on certain carats. The daily gold price is published through specialized websites and economic newspapers, and it is determined in stores based on global prices with minor local differences. Thus, the gold price is a direct reflection of global economic performance, but it is also influenced by local market specifics.

The year 2024 witnessed unprecedented increases in gold prices, as the yellow metal reached record levels both globally and locally. The price of an ounce in global markets exceeded $2450 in October 2024, equivalent to approximately 297 riyals per gram of 24-carat gold in the Saudi market. This upward trend continued into 2025, with prices remaining high compared to previous years, trading around 300 riyals for 24-carat and 260 riyals for 21-carat. These jumps were driven by several factors, most notably geopolitical concerns, the decline in the value of the US dollar, and central bank policies that boosted gold purchases as reserves. Locally, these changes reflected on gold consumption rates during wedding seasons and events, with increased demand for bullion and gold coins. Despite some fluctuations in the second half of 2024, gold maintained its value, prompting many to monitor prices daily in search of saving or acquisition opportunities.

The global gold price is influenced by several interconnected factors. First, gold is considered a safe haven during periods of economic and political uncertainty, where demand increases when global crises or geopolitical tensions rise. Second, there is an inverse relationship between gold and the US dollar, as gold often rises when the dollar's value declines, since it is priced in dollars globally. Third, interest rates play a crucial role; when interest rates are low or there are expectations of a reduction, investors turn to gold as an investment option, while raising interest rates diminishes gold's appeal, which does not yield a fixed return. Fourth, central bank purchases, especially in major countries, affect global demand, as buying gold as reserves supports price increases. Finally, gold is also affected by supply factors, such as mine production and new extraction technologies, which determine the volume available in markets.

In addition to being influenced by global factors, there are several local elements that determine the gold price in Saudi Arabia. One of the most important is the exchange rate of the riyal against the dollar, as the riyal is pegged to the dollar, which somewhat mitigates the impact of currency fluctuations; however, daily conversions play a role in determining the final price. Tax policies also affect the price, as bullion gold (24-carat) is exempt from value-added tax, while tax is added to crafted gold (18 and 21 carats). Additionally, seasonal consumer demand is a significant factor, especially during wedding seasons and holidays, where there is an increased inclination to purchase gold as jewelry or gifts. Local jewelry companies and goldsmith shops play a role in determining manufacturing costs and profit margins, which reflect on the final price for consumers. Furthermore, local demand may be influenced by the policies of banks and investment funds that invest in gold or promote related products.

The gold carat indicates its purity level, with higher carats representing a greater percentage of pure gold in the bar or piece. 24-carat gold (99.99% purity) is often used in bullion and investment coins and is the highest priced and least subject to tax in Saudi Arabia. Meanwhile, 21-carat gold (87.5% purity) is commonly used in most gold crafts and jewelry and comes at a slightly lower price due to the percentage of copper or other metals added. 18-carat gold (75% purity) is used in more ornate designs and is priced lower. According to recent prices, the gram of 24-carat gold reached approximately 297 riyals, while 21-carat was around 260 riyals, and 18-carat was about 223 riyals per gram. It is important to note that the price of crafted gold also includes manufacturing costs and the shop's profit margin, along with tax on certain carats.

The gold sector is part of the broader mining sector in Saudi Arabia, which receives increasing government support under the Kingdom's Vision 2030 to diversify income sources. The Saudi Arabian Mining Company (Ma'aden), listed on the Saudi stock market, is the key player in exploring and extracting gold locally, in addition to other metals. In recent years, Ma'aden has invested in developing gold mines and advanced processing plants, contributing to increasing the Kingdom's gold production and its contribution to GDP. However, local production still does not cover consumption levels, and large quantities of raw and crafted gold are imported to meet demand. The performance of global gold prices directly reflects on Ma'aden's revenues and affects the performance of the mining sector in the Saudi stock market. Additionally, government policies and investment facilitation play a role in enhancing the sector and providing future growth opportunities.

Gold competes with several investment tools and alternatives in both the Saudi and global markets. Among the most prominent competitors are other precious metals like silver, platinum, and palladium, which are also used as safe havens but are less renowned and widespread than gold. Gold also competes with traditional assets like stocks, bonds, and real estate, which provide direct financial returns (dividends, interest, rents), while gold relies on price changes to achieve returns. In recent years, cryptocurrencies (like Bitcoin) have emerged as an investment alternative competing with gold, especially during periods of high market volatility. Additionally, major jewelry companies in Saudi Arabia strive to offer competitive products such as distinctive gold bullion and coins, catering to a wide range of consumers looking to save or invest. All these factors make gold a choice within a diverse set of investment options.

The Saudi Capital Market Authority (CMA) and the Tadawul platform play a regulatory and supervisory role in the Kingdom's financial markets, but they do not directly set the gold price as it is a global commodity. So far, there is no futures market or exchange-traded funds for gold in Saudi Arabia similar to some global markets; however, discussions are underway regarding the potential development of investment products based on gold in the future. The authority monitors global developments and studies ways to provide new financial instruments that allow investors to diversify their portfolios safely, emphasizing the need for transparency and investor protection. Currently, trading related to gold is limited to shares linked to the mining sector, such as Ma'aden shares, and some banking products that allow purchasing gold bullion. Expectations indicate that the sector may witness developments in the coming years with increased interest in diversifying financial products.

Multiple options are available for purchasing gold in Saudi Arabia. Consumers can buy pure bullion or gold coins from accredited gold shops or through some banks that offer this service. They can also purchase crafted jewelry in various carats (21, 18) from local markets, considering manufacturing costs and added tax. Some local companies also provide electronic gold purchasing services and home delivery of bullion. For those interested in investment, they can invest indirectly by purchasing shares of local mining companies listed on Tadawul, such as Ma'aden. So far, there are no exchange-traded funds or futures contracts for gold in the Saudi market, but there is a desire to develop such products in the future. It is always important to ensure the reliability of the selling entity and obtain an official purchase invoice detailing the weight, carat, and price.

The global economic and political context plays a crucial role in determining gold price trends. Decisions made by central banks, especially the US Federal Reserve, regarding interest rates directly affect gold's attractiveness. During periods of monetary easing or expectations of interest rate cuts, demand for gold as a safe haven rises, while raising interest rates leads to a decline. Additionally, geopolitical crises, such as regional conflicts and trade tensions, drive investors toward gold to protect their wealth from market fluctuations. Locally, tax policies and import regulations affect the final gold price for consumers. Moreover, government initiatives to develop the mining sector under Vision 2030 may contribute to enhancing gold's role as a strategic economic resource. Therefore, it is essential to monitor economic and political news to understand gold price fluctuations.

The demand for gold in Saudi Arabia exhibits noticeable seasonal changes, particularly rising during wedding seasons and religious occasions such as holidays and Ramadan. During these periods, the inclination to purchase jewelry and gold gifts increases, sometimes driving local prices up due to heightened demand. Some individuals also turn to gold for savings during periods of economic instability, considering it a value-preserving tool. Demand is also influenced by factors such as promotional campaigns from gold companies and seasonal offers aimed at attracting customers. In recent years, banks and money exchange companies have observed growth in purchases of bullion and gold coins, especially with increasing financial awareness and a trend toward personal investment. These seasonal changes are part of the local market dynamics and reflect the importance of gold in Saudi culture.

Gold prices have dominated financial news in Saudi Arabia during 2024-2025, with the yellow metal repeatedly reaching historical levels. A report from Okaz newspaper indicated that gold surpassed a new peak for the fifteenth time in October 2024, supported by factors such as inflation pressures, geopolitical tensions, and expectations of US interest rate cuts. Locally, banking entities have noted a significant increase in individual purchases of gold, whether as jewelry or bullion, especially during seasons. Regulatory authorities have also shown interest in studying the development of investment products based on gold, such as exchange-traded funds, to keep pace with global developments and meet local investors' needs. Meanwhile, Ma'aden continued its investments in gold projects, enhancing the sector's contribution to the national economy. These developments indicate the continued importance of gold in the Saudi economic landscape and the desire of stakeholders to develop the sector in line with Vision 2030.

Gold has long been considered a hedge against inflation and economic crises due to its ability to preserve value during market fluctuations. Gold does not provide a fixed income like stocks or bonds; rather, it relies on price changes to achieve returns upon sale. In a low-interest-rate environment or amid expectations of currency depreciation, demand for gold increases as part of an investment portfolio diversification strategy. Some experts recommend making gold a part of the portfolio to reduce overall risks, especially during sharp declines in financial markets. However, it is worth noting that gold prices may experience sharp fluctuations in the short term and should not be considered a complete substitute for other investment tools. Hence, the importance of consulting a licensed financial advisor arises to determine the appropriate percentage of gold in any investment portfolio based on personal goals and risk tolerance.

Gold price forecasts are subject to changing factors that are difficult to predict accurately, most notably the trajectory of US interest rates, global inflation levels, and developments in geopolitical crises. In the short term, gold may experience fluctuations depending on central bank decisions or unexpected economic data. In the long term, gold is likely to maintain its importance as a strategic asset within investment portfolios, especially amid ongoing global tensions and increasing demand from central banks and some emerging economies. It is essential to recognize that any specific forecasts remain uncertain, with trends potentially changing rapidly based on economic or political developments. It is always advisable to monitor news and analyses from specialized entities before making any financial decisions.