When will gold prices drop in Saudi Arabia? This question frequently arises in the minds of investors and individuals alike, especially given the significant fluctuations in gold prices over recent years. Gold is considered one of the most important safe havens that investors turn to during times of economic uncertainty or rising inflation, and its importance in the Kingdom of Saudi Arabia is heightened due to strong local demand for investment, adornment, or savings. In 2024, gold prices recorded notable increases, starting at around 249 SAR per gram for 24-karat gold at the beginning of the year and reaching levels close to 315 SAR by the end. As we entered 2025, signs of price stabilization began to emerge, with a slight downward trend, prompting many to wonder: Is this the beginning of a new downward cycle in gold prices, or merely a short pause before a new surge? In this article, we will detail the global and local factors affecting gold prices in Saudi Arabia, the latest numerical data, and the role of monetary policies, while highlighting economic events and changes in supply and demand to help you build a deep understanding of when and why gold prices may drop in the Kingdom.
Definition of Gold in the Saudi Context and Its Economic Importance
Gold holds a pivotal position in the Saudi economy, not only as a store of value and a hedge against inflation and currency fluctuations but also due to its cultural and social role. Gold is often viewed in the Kingdom as a long-term investment tool and a traditional gift for special occasions such as weddings and holidays. The price of gold in Saudi Arabia is measured in riyals per gram, primarily based on the global price of the ounce in dollars, with local differences in manufacturing costs, taxes, and customs added.
Financially, there are currently no large gold mining companies listed on the Saudi stock market, but gold is classified within the "commodities and precious metals" sector in economic analyses. The policies of the Saudi Arabian Monetary Authority and international central banks influence gold reserves, as it is used as collateral to enhance monetary stability during periods of volatility. Therefore, global influences (such as decisions by the U.S. Federal Reserve) intersect with seasonal local demand to determine price trends in the Kingdom.
Summary of Recent Price Data in Saudi Arabia for 2024-2025
The year 2024 witnessed an exceptional rise in gold prices within the Saudi market. The price of 24-karat gold started at approximately 249 SAR in January 2024 and continued to rise throughout the year, reaching around 316.75 SAR by the end of December, with an increase exceeding 26% over the year. At the beginning of 2025, a relative stabilization was observed with a slight downward trend, as the price of 24-karat gold recorded about 314.75 SAR in early January.
The fundamental factors driving the price increase included global market fluctuations, expectations of U.S. interest rate cuts, and rising local demand. The stability and slight decline at the beginning of 2025 reflect profit-taking by investors and a calming of inflation expectations. The local price closely follows the global price of the ounce (ranging between $2,100 and $2,400 during this period), with a direct impact from movements of the dollar against the Saudi riyal.
Global Factors Affecting Gold Prices in Saudi Arabia
Gold prices in Saudi Arabia are directly influenced by global factors due to the riyal's peg to the U.S. dollar and the Kingdom's reliance on gold imports. Some of the most important factors include:
1. U.S. interest rates: An increase in rates by the Federal Reserve reduces gold's attractiveness, leading to a price drop, and vice versa.
2. Global inflation: Rising inflation drives investors to buy gold as a safe haven.
3. Dollar strength: As the dollar rises, gold becomes more expensive for holders of other currencies, leading to a global decrease in demand.
4. Geopolitical and economic crises: Escalating tensions increase demand for gold.
5. Reserves and investment flows: Increased purchases by central banks or major funds raise demand and affect prices.
These factors intertwine with local conditions to determine gold price direction within the Kingdom.
Local Influences: Supply, Demand, and Government Policies
In addition to global factors, local influences play a significant role in determining gold prices in Saudi Arabia. Seasonal demand rises during wedding seasons and holidays, which may elevate local prices even if they remain stable globally. Moreover, government policies related to import duties or regulation of jewelry trade directly impact the final price for consumers.
In recent years, gold imports have increased to meet growing demand, while no large-scale local mining projects have yet emerged that could alter the supply equation. Therefore, the local market remains sensitive to any changes in global prices or government regulatory decisions, such as the imposition of new taxes on gold or adjustments in import regulations.
When Will Gold Prices Drop in Saudi Arabia? Historical Analysis and Real Cases
Gold prices in Saudi Arabia often correlate with global and local economic variables. Historically, significant declines have been observed in periods following crises when confidence in the global economy begins to recover and interest rates rise gradually. For example, following record highs in 2024, gold began to stabilize at the beginning of 2025 with a slight downward trend, due to profit-taking and a calming of inflation fears.
In other words, gold prices typically drop in the following scenarios:
- A sudden increase in global interest rates (especially in the U.S.)
- A decline or stabilization in inflation rates
- A calming of geopolitical situations and a return of confidence to markets
- A significant increase in supply due to new discoveries or increased global production
It is important to emphasize that declines may be temporary or limited, and continuous monitoring of global and local economic indicators is essential.
The Role of Interest Rates and the Dollar in Local Gold Movement
Global interest rates, particularly those in the U.S., play a crucial role in determining gold's direction. When central banks raise interest rates, investing in bonds and currencies becomes more attractive than gold, which does not provide periodic returns, leading to decreased demand and lower prices. Conversely, when interest rates are cut, investors turn to gold as a safe alternative.
The U.S. dollar is the reference currency for pricing gold globally. With the riyal's peg to the dollar, any fluctuations in the dollar directly reflect on local prices. If the dollar rises globally, gold prices fall, and vice versa. Therefore, monitoring the Federal Reserve's decisions and U.S. economic reports is essential for understanding gold trends in Saudi Arabia.
Differences Between Global and Local Gold Prices in Saudi Arabia
Although local gold prices in Saudi Arabia follow the global price of the ounce in dollars, there are slight local differences due to various factors. The main differences include:
- Gold manufacturing: The cost of producing gold jewelry and design additions increases the final price.
- Customs and tax fees: Additional fees may sometimes be imposed on importing gold or jewelry.
- Jeweler profitability: Traders add their own profit margin.
Typically, the difference between global and local prices ranges from a few riyals per gram, but it may widen during periods of sudden increases in local demand or changes in import policies.
Recent News and Developments Affecting Saudi Gold Price Forecasts
In 2024, the most significant news was the gold reaching record prices several times, driven by expectations of U.S. interest rate cuts and increased central bank purchases. As we entered 2025, prices stabilized and began to trend downward, particularly after a strong drop in global markets in October 2025 by 5.7% in one day.
Among the impactful news was the discovery of a massive gold reserve in the Najran region in the southwest of the Kingdom, an event that could change the supply equation in the future if commercial production begins. Additionally, there are discussions about new regulations that may govern the import and export of gold jewelry, which could pressure prices or support their stability depending on the policies adopted.
Analysis of the Precious Metals Sector and Gold's Competition with Alternative Investments
Gold competes with several investment categories both locally and globally: stocks, real estate, bonds, cryptocurrencies, and other precious metals like silver and platinum. Demand for gold typically increases when other markets decline or economic risks rise.
In Saudi Arabia, gold faces competition from local equity funds, real estate investment trusts (REITs), and bank deposits. Additionally, rising bank interest rates may reduce gold's attractiveness. On the other hand, gold's appeal increases during holiday seasons, as demand rises for cultural gifts or savings tools. Nevertheless, gold's share in investment portfolios remains significant for hedging against economic fluctuations.
Hail Cement Company (3001): An Example of Sector Movement Differences from Gold
Hail Cement Company (Symbol 3001) is listed on the Saudi stock market and operates in the cement industry, with no direct link to gold prices. The company's stock price moves according to the performance of the real estate and construction sector, while gold reacts to its specific global and local factors.
Despite the lack of a direct relationship, the performance of industrial sectors like cement can reflect the overall health of the economy, indirectly affecting the liquidity available for investment in gold or other assets. For details on Hail Cement Company's stock, you can visit the stock page via this link.
Forecasting Gold Price Trends in Saudi Arabia: Between Technical and Fundamental Analysis
Analyzing gold price trends requires combining fundamental analysis (studying global economic indicators, inflation, interest rates, geopolitical events) with technical analysis (reading charts and support and resistance levels). In recent years, reports have indicated that gold may remain high in the medium term if inflation persists or economic tensions escalate.
However, some forecasts suggest that prices could decline if global interest rates begin to rise and inflation fears ease. It is important to rely on reliable sources, such as reports from the World Gold Council and international financial institutions, and not to make investment decisions based on individual forecasts or uncertain news.
When Does Seasonal Demand Affect Saudi Gold Prices?
The gold market in Saudi Arabia is characterized by increased demand during certain seasons, notably holidays, the Hajj season, and wedding seasons. During these periods, purchases of gold jewelry significantly increase, sometimes leading to local price rises even if global prices remain stable.
Gold shops and jewelers benefit from these seasons to boost sales and offer special promotions, creating additional pressure on prices. Therefore, buying outside these seasons is an option for those looking to take advantage of periods of relative stagnation and temporary price declines.
Impact of New Gold Discoveries in Saudi Arabia on Future Prices
Recent reports announced the discovery of a massive reserve estimated at around 11 million tons of gold ores and other minerals in the Najran region in the southwest of the Kingdom. While this discovery may not immediately affect prices, it holds the potential to increase supply in the local market in the long term, which could pressure prices if the discoveries lead to widespread commercial production.
Currently, the Saudi market remains reliant on gold imports, but with the development of local mining projects, the Kingdom could become a significant player in the global gold market, potentially reshaping the price landscape both locally and internationally.
The Role of Economic and Political News in Moving the Gold Market
Economic and political news play a crucial role in moving gold prices, both in Saudi Arabia and globally. Decisions by central banks, inflation reports, election results, and significant geopolitical events (such as wars or financial crises) all immediately affect investor behavior and their inclination toward gold as a safe haven or the opposite.
In Saudi Arabia, it is essential to monitor news related to monetary policies, trade balance reports, and mining sector news, in addition to global developments that could alter investor expectations. A rapid response to news is one of the factors that increases price volatility, especially when unexpected reports are released.
Conclusion
Through our analysis of when gold prices will drop in Saudi Arabia, it becomes clear that gold price movements are influenced by a delicate mix of global factors (interest rates, inflation, the dollar, geopolitical events) and local factors (seasonal demand, government policies, developments in the mining sector). The year 2024 saw strong price increases followed by a period of stability and a slight downward trend at the beginning of 2025, prompting many to closely monitor economic indicators.
The decision to engage with gold, whether by buying or waiting, is a personal choice that depends on financial goals and risk tolerance, and should be based on objective analysis and reliable information. The SIGMIX platform provides economic and financial analyses to help you better understand the market. To ensure appropriate investment decisions, we always recommend consulting a licensed financial advisor before taking any steps in the gold market or other assets.
Frequently Asked Questions
Gold prices in Saudi Arabia are influenced by a range of key factors, including global interest rates (especially U.S.), the strength of the dollar against other currencies, global and local inflation rates, geopolitical situations, local supply and demand (especially during holiday and wedding seasons), and changes in government policies or taxes on gold. All these elements intertwine to determine when gold may experience a significant drop in the Saudi market.
Yes, while the Saudi market relies on the global gold price as a basis, there are slight local differences. These differences arise from the manufacturing costs of gold jewelry, customs and tax fees, and jeweler profitability. Typically, the difference ranges from 5 to 15 SAR per gram of 24-karat gold. However, significant price changes often align with movements in the global market.
When central banks like the U.S. Federal Reserve raise interest rates, gold becomes less attractive as an investment because it does not yield periodic returns like bonds. This often leads to a decline in gold prices globally, which in turn reflects on the Saudi market due to the riyal's peg to the dollar and the Kingdom's reliance on global prices.
The discovery of a large gold reserve in Saudi Arabia could increase local supply in the future, potentially pressuring prices if widespread commercial production begins. However, the immediate impact is usually limited, as developing mines and infrastructure takes years. In the long term, these discoveries could contribute to stabilizing or lowering local prices if production increases significantly.
Indeed, local demand for gold in Saudi Arabia rises during holiday seasons, the Hajj season, and wedding seasons, sometimes leading to temporary price increases regardless of global stability. This surge in demand raises local prices due to pressure on supply from jewelers and gold shops.
The relationship is often inverse in the short term; when the Saudi (or global) stock market experiences volatility or sharp declines, some investors turn to gold as a safe haven, increasing demand and raising prices. Conversely, during periods of stock market prosperity and rising oil prices, demand for gold may decrease, potentially leading to price declines.
Both fundamental analysis (studying economic indicators, interest rates, and inflation) and technical analysis (reading charts and support/resistance levels) can help form an initial picture of gold trends. However, gold remains sensitive to unexpected events, so neither can be fully relied upon for final decision-making; it is advisable to combine both analyses and monitor impactful news.
Gold is traditionally considered a safe haven during periods of uncertainty and inflation, but that does not mean it is risk-free. In some years, its price may drop significantly. Investing in gold is beneficial for diversification and risk reduction, but it does not yield periodic returns like stocks or bonds. It is always advisable to balance gold with other assets in an investment portfolio.
Typically, the best time to buy is when gold prices drop due to rising interest rates or stable inflation, or during periods outside seasonal peaks that experience high demand. Some investors also prefer gradual purchases over time (the dollar-cost averaging principle) to mitigate the risks of poor timing.
You can follow gold prices through reliable Saudi economic websites such as Okaz, Al-Youm Al-Sabea, Al-Masry Al-Youm, or via official platforms like Tadawul. Financial analysis platforms and banking applications also provide real-time updates on prices. Monitoring global news and economic indicators also helps in understanding future gold trends.