RIYADH, June 21 (Arab News): Gold prices may be at record highs, but that has not stopped Saudi consumers from buying. In the first quarter of 2025, demand for gold jewelry in the Kingdom jumped 35 per cent year on year, even as global demand fell 21 per cent, according to the World Gold Council.
That surge comes amid a global price rally, with gold breaching $3,500 per ounce in April, up from around $2,370 a year earlier - driven by geopolitical tensions, inflation fears, and aggressive central bank buying.
"This rapid increase in the price of the bullion can be attributed to one main reason - central bank buying," Vijay Valecha, chief investment officer at Century Financial, told Arab News.
Yet despite the soaring cost, Saudi Arabia's deep-rooted gold culture continues to shine, with consumers purchasing 11.5 tonnes of gold jewelry in the first quarter, up from 8.5 tonnes a year earlier.
"This feat occurred despite the 34 per cent rise in prices in early 2025, demonstrating Saudi consumers' strong demand and purchasing power," said Valecha.
Vijay Valecha, chief investment officer at Century Financial. Supplied
Gold in the Kingdom is more than a financial asset - it represents tradition, adornment, and intergenerational wealth. From bullion bars to minimalist 18-carat jewelry, Saudi buyers are proving resilient even as other regional markets, such as the UAE and Kuwait, witness sharp declines in demand.
Hamza Dweik, head of trading for the MENA region at Saxo Bank, emphasized gold's cultural role, telling Arab News: "Gold is deeply embedded in Saudi traditions, especially during weddings and festive occasions. This cultural attachment ensures a steady baseline of demand, even during price surges."
Valecha explained that following the conflict in Ukraine, many countries grew concerned about holding excessive reserves in US dollars, prompting nations such as China and Russia to increase their gold purchases.
"China has spearheaded record levels of global central bank purchases of gold. Hence, looking ahead, the trend of gold buying by central banks is expected to continue," he added.
Another push came in May, when Moody's downgraded the US credit rating from Aaa to Aa1, citing "a sustained increase in government debt (exceeding $36 trillion), rising interest payment ratios, and persistent fiscal deficits exacerbated by political dysfunction and policy uncertainty."
Valecha added that this marked the first time the US lost its top-tier rating from all three major agencies.
In different parts of the Kingdom, people buy gold for different reasons. In the north, around 70 per cent of buyers view gold primarily as an investment, while in the south, it is more closely tied to tradition and adornment.
