Ounce: Concept and Impact on the Saudi Financial Market

The ounce, or troy ounce, is a weight measurement unit that traces its roots back to European measurement systems. In financial markets, the ounce often refers to the troy ounce, which equals 31.1034768 grams. This unit is used to price precious metals such as gold, silver, and platinum. The regular ounce equals 28.3495 grams and is used for weighing food and other goods.

The importance of the ounce lies in its provision of a standardized measure for pricing and exchanging gold and silver globally. When it is announced that "the price of gold today is $2200 per ounce," it means that each troy ounce of gold (31.103 grams) equals this amount in dollars in the global market. This standardization facilitates price comparisons between markets and countries, making the ounce an indispensable tool in trading and investing in precious metals. In Saudi Arabia, although popular transactions are often in grams, the ounce remains the primary reference for pricing gold and determining local and global market trends.

Saudi Arabia relies on the global ounce price for gold pricing, where the price of gold is announced in US dollars per ounce and then converted to Saudi riyals based on the daily exchange rate (usually 3.75 riyals per dollar). Subsequently, the price of one gram is determined locally by dividing the ounce price by 31.1035, adding a commission or fees from banks and jewelers.

There is no official gold exchange in Saudi Arabia like in global markets, but ounce prices are used as a reference in economic bulletins and jewelry markets. The local price is also affected by internal factors such as customs fees, seasonal demand (during holidays and occasions), and transportation and storage costs. Thus, the global ounce price remains the foundation upon which gold pricing in the Kingdom is built, with some minor differences based on local market conditions.

The ounce price is influenced by several key factors: US monetary policy (especially interest rates), the value of the US dollar, geopolitical tensions, inflation rates, and supply and demand levels in the precious metals market. When central banks raise interest rates, the price of gold often declines because the cost of holding gold (which does not yield returns) becomes higher. Conversely, during times of crises or a declining dollar, the ounce price rises as a safe haven.

Locally, ounce prices are also affected by the movement of the Saudi riyal against the dollar, local demand for gold and jewelry, in addition to Saudi government policies regarding the import and trade of precious metals. With rising fuel prices or transportation fees, the price per gram in the Saudi market may increase even if the global price remains stable. The greater the global volatility in gold, the more important it becomes for Saudi investors to monitor the ounce price.

The ounce is an important economic indicator in Saudi Arabia, as gold prices reflect the state of both the local and global economies. During periods of global economic turmoil or high inflation, demand for gold as a safe haven rises, leading to an increase in the ounce price. This rise may prompt some Saudi investors to shift part of their investments from stocks or real estate toward gold, affecting liquidity in the financial market.

Moreover, the stability or volatility of the ounce price is used as an indicator of investor confidence, as market sentiment and fears can be inferred from gold price movements. In Saudi Arabia, companies, banks, and financial institutions monitor ounce reports daily to assess their potential impact on other market sectors, including the construction and cement sectors.

In 2024, the ounce price experienced sharp fluctuations globally, starting at around $2010 per ounce and gradually rising to levels approaching $2300 by mid-year. The upward trend continued into the first quarter of 2025, with gold reaching record levels exceeding $2400 per ounce at times. This growth was driven by a declining US dollar and geopolitical tensions, in addition to trends in US monetary policy.

When applying the exchange rate (3.75 riyals/dollar), these prices translated to a range of 8650–9000 riyals per ounce in the Saudi market. Silver prices also rose, ranging between $27–32 per ounce. The return on gold was approximately 20–25% in 2024, with growth continuing in the first half of 2025. These figures reflect the importance of monitoring the ounce for Saudi investors, especially during periods of significant volatility.

In daily transactions, investors and shop owners need to convert the ounce price to grams or Saudi riyals. The basic formula is: 1 troy ounce = 31.1035 grams. If the global ounce price is $2300, the price per gram is 2300 ÷ 31.1035 ≈ $73.9 per gram.

To convert the price to Saudi riyals, the ounce price in dollars is multiplied by the exchange rate (e.g., 3.75). Thus, the ounce becomes 2300 × 3.75 = 8625 riyals. The price per gram in riyals is then: 8625 ÷ 31.1035 ≈ 277 riyals per gram. This way, investors or customers can easily calculate the cost of buying or selling gold based on global and local ounce prices.

There is an indirect relationship between ounce prices and the Saudi stock market. During times of crises or significant increases in gold prices, liquidity may shift from stocks to gold as a safe haven, sometimes leading to declines in stock indices. As gold stabilizes or declines, investments gradually return to stocks in search of better returns. However, this relationship is not strict, as other factors such as oil prices, government policies, and movements in various sectors intersect.

In 2024–2025, it was observed that rising gold prices coincided with some declines in the performance of the Saudi stock market during specific periods, but other factors such as energy prices and government projects had a more significant impact. Thus, the ounce is considered one of the indicators of overall market sentiment, but it is not the sole factor determining stock direction.

Hail Cement stock (3001) is listed on the Saudi Tadawul and represents one of the strategic cement companies in the northern region of the Kingdom. The company was established in Hail and is engaged in the production and marketing of various types of cement. In 2024, the stock price fluctuated between 11 and 13 riyals amid acquisition news from Qassim Cement.

The company's market capitalization was estimated at around 580–600 million riyals, with a price-to-earnings ratio ranging between 8 and 12, reflecting relative stability in financial performance. The dividend policy is moderate, with the company distributing annual dividends in the range of 0.40–0.50 riyals per share in previous years, equating to a dividend yield of between 3.5% and 4.5% depending on the price. It has not announced significant distributions recently amid acquisition procedures, but the stock performance remained resilient with the stability of the cement sector in the Kingdom.

The cement sector is one of the vital sectors in the Saudi economy, supporting major infrastructure and housing projects. The sector includes leading companies such as Saudi Cement (3000), Yamama Cement (3060), Qassim Cement (3030), and Hail Cement (3001). The sector is highly competitive and sometimes suffers from overproduction, which puts pressure on prices.

Hail Cement focuses its activities in the northern region of the Kingdom and benefits from its geographical location to meet regional project demands. In recent years, the company has faced challenges regarding competition and production costs, but it has maintained its market share. The acquisition by Qassim Cement is expected to provide it with additional strength through production and distribution integration, enhancing its market position in the future.

Hail Cement competes with several major companies in the Saudi cement sector, including:
- Qassim Cement (3030): the new competitor and partner after the acquisition.
- Saudi Cement (3000): the largest company in the sector by market share.
- Yamama Cement (3060): with a wide customer base and large projects.
- Arabian Cement (3039): a strong competitor in the Middle East.
- Eastern Cement (3080) and Al-Jouf Cement (3091): competing in specific regions.

The strengths of these companies vary in terms of production capacity and geographical coverage. With the completion of the merger between Hail and Qassim, the competitive landscape is expected to change, especially in the north and central regions of the Kingdom.

Although the relationship is not direct, rising ounce prices may reflect on the cement sector by changing investor sentiment and shifting liquidity between sectors. During periods of rising gold, demand for high-risk stocks may decline, while during periods of stability or falling gold, liquidity partially returns to sectors like cement.

Additionally, government infrastructure projects, which are the main driver of cement demand, are indirectly affected by global metal and energy prices (including gold). However, in general, the impact of the ounce on cement stocks remains secondary compared to factors such as local demand, energy costs, and government policies supporting the industrial sector.

Hail Cement stock witnessed key developments in 2024, the most notable being Qassim Cement's announcement of an acquisition offer at a price of 13.27 riyals per share, representing a premium over the market price at the time. The offer was approved by regulatory authorities, and the stock is on its way to merging under Qassim's umbrella.

During the same period, the company announced balanced financial results despite challenges from rising fuel costs and seasonal demand slowdown. The company did not announce significant dividends in 2024–2025, awaiting the completion of the merger process. This move is expected to strengthen the company's position in the cement sector in northern Saudi Arabia. The stock price and news can be followed on its Tadawul page: /stocks/3001/.

Saudi investors turn to the ounce not only to purchase gold but also as a tool for comparison and hedging against market fluctuations. The ounce represents a 'safe haven' during times of economic uncertainty, prompting some investors to reduce their exposure to stocks or real estate and increase their gold holdings.

The ounce is also used to compare the performance of different sectors. For example, if gold rises by 20% while cement stocks remain stable, an investor may decide to rebalance their assets. This role makes the ounce a vital indicator in managing Saudi financial portfolios, especially amid global volatility.

To monitor ounce prices globally and locally, specialized financial websites (such as TradingView, Investing.com, Argaam, Tadawul Saudi Arabia) can be relied upon. These platforms announce ounce prices in dollars and riyals, in addition to daily news and analyses about the gold market.

As for Saudi company indicators, they are available through the official Tadawul website, where stock prices, news, financial indicators, and acquisition news such as those related to Hail Cement (3001) can be followed. It is always advisable to review quarterly and annual reports of companies and monitor official disclosures to ensure information accuracy.