Gold prices are expected to witness an increase of 10-17 percent during the coming four months compared to the first quarter of the year. JEDDAH – Demand for gold and jewelry is expected to increase by 30-40 percent during the summer vacation when most marriage ceremonies take place, according to market sources. As for prices, some sources expect an increase of 10-17 percent, while others predict a slight fall. Abdullah Al-Ammari, member of the Gold and Jewelry Committee at the Jeddah Chamber of Commerce and Industry (JCCI), said that gold prices are expected to witness an increase of 10-17 percent during the coming four months compared to the first quarter of the year. Referring to the trend of some customers to turn to silver ornaments and accessories, Al-Ammari said: “This has already produced a negative impact on the volume of gold sales. However, prices of these ornaments and accessories are high compared to the market value of this cheap metal. Unlike gold, silver ornaments would not benefit the customers if they want to convert it into liquid cash.” Al-Ammari advised Saudis to make gold as part of their investment because “it is both a decoration and treasure for the future” but silver ornaments and accessories do not retain much value as an investment. Muhammad Azouz, deputy chairman of the National Committee for Precious Metals at the Council of Saudi Chambers of Commerce and Industry, also expected an increase in prices of gold in the coming summer season compared to the same period last year. “There could be about 30 percent increase in the sale of gold during the period. However, the price of gold could witness a fall in the summer compared to the last summer if its price continues a steady as increase at present,” he said. Meanwhile, Muhammad Al-Hashdi, executive chairman of Ali Al-Hashdi Company, said that he is not expecting any increase in prices of gold in the summer season. “The current situation of the global economy gives an indication that prices of gold would remain almost the same. However, there would be an increase in sales due to the huge demand mainly because of the marriage season,” he said. According to Al-Hashdi, prices of gold are now at a corrective level, and the prices are acceptable in view of the condition of the global economy. He cautioned that investment in gold is a dangerous game. “A person who makes investments in gold should be well aware of the market fluctuations in the prices of the yellow metal. Investment in gold is not like other investments as there are many factors, including political and economic, as well as major international decisions and agreements, that may impact the gold market,” he said adding that even some traders who are market experts incur losses in gold business because it is very difficult to predict the rise or fall of gold prices. Ahmad Al-Sharief, member of the Gold and Jewelry Committee at JCCI, said that there has been an increased activity in the gold market as the summer vacation is around the corner. “Some affluent customers are now moving to market to amass gold either for saving or due to the anticipated increase in prices in summer season,” he said. Al-Sharief noted that there are no special factors that control prices of gold in the Saudi market. On the other hand, the local market is controlled by the impact in the global market. When gold prices increase or decrease in the global market, it reflects in the Saudi market also. “The instability of the global economy during the current year has turned many investors to gold as the safest product,” he said noting that China is the leading country buying gold. Referring to the trend to buy silver ornaments and accessories by some customers, he said that this would not produce any considerable negative impact on the demand for gold. “Most customers do not turn away from gold for their major occasions such as wedding. They buy silver and accessories for a limited use,” he said while highlighting the potential of gold as a safe investment and ideal means of saving. He also expected at least one percent increase in the sale of gold during the coming summer season. Meanwhile, gold traders and salesmen at Al-Ahsa gold market said that the sale of the yellow metal is expected to jump about 40 percent in the coming summer vacation. They hoped that the mass wedding parties, scheduled to be held in summer, would boost the market which was dull during the last few months due to the fluctuations in gold prices in the global market. Ahmad Al-Baqshi, a gold trader and member of the Trade Committee at Al-Ahsa Chamber of Commerce and Industry, said that a steep hike and fluctuations in the gold price in global market has brought down their sales by 70 percent in the local market during the last few months. The gold market merchants say that they can compensate the loss by an increased activity in summer. He expected that the volume of gold sales would reach SR12 million in their market in the summer season, with average individual purchases reaching SR20,000. He added that the traders cash in on the general tendency on the part of customers to buy light weight ornaments. “So we concentrated on a wide variety of designs with comparatively lower weight,” he added. Reacting to reasons for the increase in prices, Khalifa Al-Molhem, another trader, said that global forces are controlling the gold prices. “Price of gold is global and almost unified in all countries. The only difference is in the margin of profit in the cases of ornaments both handmade and manufactured in factories,” he said.
