JEDDAH, 28 November 2005 — Saudi investment in gold is rising if the recent figures released by the World Gold Council (WGC) are any indication.
Retail gold jewelry sales have risen by 27 percent across the Kingdom during the third quarter of 2005. Sales figure has reached SR2.39 billion. “The jump is 27 percent more in the third quarter compared to over the same period in 2004,” the WGC reported.
Sales across Saudi Arabia increased from SR1.88 million in Q3 of 2004 to SR2.39 million over the same period in 2005.
On the other hand, the gold consumption in terms of tonnage rose by 13.7 percent, from 34 tons in Q3 of 2004 to 39.4 tons in Q3 of 2005.
The retail investment (bullion coins and bars) consumption increased by 45 percent from 1.1 tons in Q3 of 2004 to 2 tons in the same period of 2005.
“Many factors have led to the improved performance in the Q3 of 2005,” WGC’s Gulf Manager Usama Alwazir said. For example, the successful Umrah season and the boom in domestic tourism and festivals have contributed to the improved performance of the gold market.
“The Kingdom has the most distinguished gold market, as it has the world’s latest range of jewelry products at competitive prices. This is because as much as 70 percent of items in gold jewelry are produced locally,” he said.
The high volatility of gold prices in the last two years has not weakened the spirit among consumers to visit various gold markets across the Kingdom.
Gold demand in Saudi Arabia continues to grow despite a 10 percent rise in gold prices in Q3 of 2005. Contributing to the increased gold demand are factors like the increase in the Saudi national income due to the increase in oil prices, salary increase of government civil and military employees by 15 percent, uplifting of the social security ceiling by 80 percent, allocation of SR30 billion for the social services sector, plus tackling investment obstacles to attract local and foreign investments as well as restoring migrating Saudi capitals and the increase in the finance of many lending funds announced by Custodian of the Two Holy Mosques King Abdullah have all contributed to the increased demand for gold.
“Whatever the prices, gold remains the favorite among consumers for investment as it has been so over the years,” Alwazir added. Real estate and stocks are among the other favorite investment channels for local investors.
“The Kingdom remains the biggest gold market for consumers in the region. One main consideration for investing in gold is the security against inflation it offers. What’s more, gold is considered to be an excellent risk diversifier asset,” Alwazir said, adding that despite the concerns sometimes caused the world over by political and security situations, gold markets have remained healthy and stable especially across the Gulf.
It is against this background that the WGC has announced the sponsorship of its first gold and jewelry exhibition for women at Four Seasons Hotel in Riyadh from Dec. 10-13. Prominent Saudi gold and jewelry companies are among the participants.
Moreover, the WGC’s promotional activities have continued across the Gulf to maintain the momentum that prevailed in 2005. One of the activities will commence on Dec. 10, with the WGC sponsoring and supporting the first licensed women exhibition for gold and jewelry in Saudi Arabia. It is a “pioneering and unique exhibition” that will be exclusively for women and introduce the latest Saudi, Gulf-made and international models and designs of gold and jewelry from prominent Saudi companies.
What is more, the exhibition visitors will all be women, as Saudi women constitute 49 percent of the total population of the Kingdom and 35 percent of the total workforce in the government. Also, commercial registrations (CRs) issued for Saudi women in Riyadh total only 3000.
Worldwide, gold demand was up by seven percent in tonnage and 18 percent in dollar terms. Q3 2005 is the seventh consecutive quarter of positive growth in total tonnage demand, and tenth consecutive quarter of double-digit growth in total value. Year-on-year growth for gold jewelry in the first three quarters of 2005 was up 12 percent in tonnage terms and 20 percent in dollar terms. However, the rise in gold investment demand in the Q3 period was the highest, marking a 56 percent increase.
