Gold prices in the local market have hit a record high with 24 karat gold being sold for SR113 per gram on Monday. This is the highest price ever recorded for the yellow metal, according to gold traders in the Eastern Province. Over the past week, prices have gone up by SR5 per gram, with a rise of SR3 over the weekend. According to a survey, gold jewelry consumption has dropped by 9 percent in the UAE, 10 percent in Saudi Arabia, and 11 percent in other Gulf countries. Gold traders say that their sales have, in fact, dropped drastically over the past two months. Compared to December 2008, sales dropped by about 40 percent in January with most customers adopting a wait and see approach. People have become wary of spending as a result of the global economic crisis said a salesman from a jewelry outlet in Dammam ladies market. Customers look at the models and designs, but when they hear the price, they change their minds and leave the shop empty-handed. “They say the prices are very high, and their budget does not allow them to purchase now,” the salesman added. Another jewelry shop owner from Al-Khobar said that fluctuating prices have contributed to the uncertainty in the market. Those who want to invest in gold may fear a future crash in prices while those who want to buy gold for personal use may be waiting for a fall in prices. In addition to that, jewelry-making charges can work out to anything between SR5 and SR12 per gram of gold depending on the design and model. Pure gold is mainly used as an investment. Gold prices have a tendency to go up suddenly when there are wars and uncertainty in the world. As uncertainty has hit global financial markets, more and more funds are being channeled into pure gold, which is the safest investment avenue in times of crisis, said one of the traders about the hike in gold prices. “It is natural for people to turn to gold as an asset since individuals and institutions are losing faith in banks and shares,” he said. A counter sales executive from Hassan Al-Nemer Jewelry outlet at Al-Waha Mall in Dammam said that their sales have dropped by about 40 percent over the past two months. All the world's markets have been affected by the financial crisis and sales of gold are no exception, he said.
