"The reason for the sudden increase in prices is due to a sudden jump in the price of gold which has finally exceeded $1,500 per ounce," a gold merchant from Dream Jewelry told Arab News. He predicted that the prices would continue to rise till it reaches $1,600 per ounce.
Gold coins are currently sold in the Kingdom at SR1,360 per eight grams. He said although the current selling price of gold per gram is SR168, gold jewelry prices could vary depending on design.
K. Moidu, manager of Atlas Jewelry, said that most of the gold shops in downtown Riyadh have their own factories in the industrial area in the suburb of the capital. "Items of gold jewelry are made according to the specifications of customers.” Therefore, he added, they have different prices according to the design despite the fact that their weight remains the same from one jewelry item to another.
Citing reasons for the rush in gold shops, a salesman said: "Buyers are coming to the shops anticipating a further rise in prices in the coming weeks, while the sellers want to make money out of the old jewelry they have bought earlier at a cheaper price."
Retail prices for 24-carat gold in the UAE reached 180 dirhams per gram for the first time ever, and silver kilo bars surged to 5,347 dirhams.
“The surge in gold prices shows that due to lack of confidence in the stock markets because of economic uncertainty globally and in the region, investors are shifting to gold as a safe haven,” Faisal Alsayrafi, managing director and CEO of the Financial Transaction House (FTH), said.
A second day of deep losses for the dollar and near 2 percent gains in oil and grain markets that fueled further inflation concerns also buoyed bullion, which once again rose in tandem with riskier assets like equities as investors shifted their focus from gold's role as a safe-haven play to its potential as a store of value, Reuters reported.
"Concerns about the debt positions of Europe and the US and inflation in much of the world are driving demand for gold. These factors are likely to linger, which could push prices higher, though the extent of the rise in prices to date may limit the scope for more advances," Paul Gamble, head of research at Jadwa Investment, said.
Spot gold rose to an all-time high of $1,505.70 an ounce. It was later up 0.6 percent at $1,503.30 by 1550 GMT, having risen almost 4 percent over the past eight days. Silver also hit a fresh 31-year high of $44.80 an ounce.
Gold has notched new records for four consecutive days, aided in large part by Monday's threat of a downgrade to the United States' triple-A credit rating and lingering euro zone debt worries that have depressed the dollar.
Standard & Poor's said Monday it might cut its long-term rating on the United States within two years, unless Washington can rein in its budget deficit.
If it were to do so, the dollar may come under pressure, impacting currency markets and economic stability throughout the world — a perfect recipe for higher gold prices.
"Gold has been acting as a currency in its own right, and that is why we are up at $1,500," Reuters quoted Simon Weeks, head of precious metals at the Bank of Nova Scotia, as saying.
Buying in the Asian countries is being fueled by rising consumer incomes and higher inflation, against which gold is traditionally seen as a hedge. Both China and India reported higher than expected inflation last week.
While gold investors in Western markets have been motivated chiefly by risk aversion in recent years, the precious metal is a much more deeply established asset in Asia. India and China are by far the world's biggest bullion consumers.
According to a report from Standard Chartered bank, gold prices could reach $2,100 per ounce by 2014 and possibly as high as $5,000 by the end of the decade. The bank said gold prices are yet to hit the super cycle as demand from the emerging economies like China and India will scale to peak levels later in the current decade.
