Saudi Arabia is the Middle East's largest gold consumer with residents showing special preference for gold jewelry and pilgrims making it a point to buy the yellow metal here. However, the spiraling price of gold is playing a dampening factor for many pilgrims. “The price of gold in Saudi riyals is way high as compared to the same in our national currency. I had planned to buy gold bangles but it looks like I will end up buying only a gold ring,” said Sadia Yusuf, an Indonesian pilgrim. Yusuf, who visited the Kingdom five years ago, said that though she still trusts the quality of Saudi gold, the hike in its price in the last five years is making her rethink her decision to buy gold from here. Gold rose to as high as $1,062.70 an ounce on the New York Mercantile Exchange before settling at $1,056.30, up $11.90, or 1.1 percent last week. The hike has resulted in many people selling their gold rather than buying new items. Mohammad Al-Sharife, a gold merchant in a jewelry store in Jeddah said that “the demand has decreased due to the increase in the price of gold, and we see people more willing to sell their gold jewelry”. “The rate of gold depends on the US dollar and the Euro and not on local demand. The price of gold increases as the value of the dollar decreases,” said Al-Sharife. “Gold prices fluctuate as the rate changes across the globe. The prices may also vary by five to eight riyals depending on the jewelry design,” explained Ahmed Salem, owner of a gold shop in Jeddah's Al-Safa District. “There is a larger selection of shops, range of quality and designs available here than in our home country. Holy places are the main attraction for us here, but gold lures us as well for its quality and design,” said Maimona Banu, an Indian pilgrim visiting the country. “I wish to take back gold gifts for my granddaughters, but current prices make it difficult for me,” she added. For Mohammed Anwar, an expat residing in Jeddah, gold is a symbol of status. He said that he likes his wife to wear gold jewelry and that he would rather buy gold in the Kingdom than in any other country in the world. There are over 6,000 retail jewelry shops in Saudi Arabia that sell SR8 billion worth of gold annually and “Jeddah is the main source of gold for the two holy cities of the Kingdom, which are visited by large numbers of pilgrims each year,” said Amir Ahmed, owner of a gold store in Jeddah's Al-Murjan market. The CEO of the World Gold Council (WGC), Aram Shishmanian, said that, “the sustained demand we are seeing from investors is not entirely about returns. Investors are viewing gold as a form of asset which preserves wealth despite the economic instability.” “Fear of inflation and expectations of higher rates make gold an attractive investment, but although we have new designs and discounts, the overall sales this year have decreased by thirty percent,” states Ahmed. According to a WGC report, the short term reasons for the recent gold price rise include: recognition of gold as an asset, continued fear of further inflation, the weakening dollar and equity market performance. Anwar agrees that in times of economic downturn people consider gold to be an asset but also adds, “I consider it the best gift for our loved ones and have noticed the significant increase in price especially around the holiday and Ramadan period in the Kingdom.
