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Gold prices in Saudi Arabia rose to 466.04 SAR per gram, up from 462.25 SAR on the previous day. The price per tola also increased to 5,435.77 SAR from 5,391.64 SAR.
Gold’s Price Movements
Gold’s price increased to 4,660.50 SAR for 10 grams and reached 14,495.40 SAR for a troy ounce. Local prices may vary slightly from the published rates.
Gold serves as a store of value and a safe-haven investment in turbulent times, mitigating inflation and currency depreciation. Central banks are substantial Gold holders, adding 1,136 tonnes worth $70 billion in 2022.
Gold’s price inversely correlates with the US Dollar and stock market rallies, rising when the Dollar depreciates. Price can fluctuate with geopolitical events or economic fears.
Gold prices generally increase with lower interest rates. Most changes are tied to the US Dollar (XAU/USD) behaviour.
This information is for purposes only and not investment advice, with potential risks or inaccuracies. FXStreet and the author offer no guarantees and hold no responsibility for any conclusions drawn from the data. The author is not an investment advisor.
Central Banks and Market Trends
We’re seeing a slight uptick in gold, reflecting a broader market uncertainty. August’s Consumer Price Index came in hotter than expected at 3.8%, fueling the argument that gold is a necessary hedge against inflation. However, this has also strengthened the Federal Reserve’s “higher for longer” stance on interest rates, creating a significant headwind for the non-yielding metal.
We should remember that central banks continue to be major buyers, a trend we saw solidify back in 2022 when they added over 1,100 tonnes to reserves. Given the renewed geopolitical tensions in the South China Sea this past quarter, we anticipate this demand for safe-haven assets will provide a solid floor under the price. This institutional buying is a key factor that wasn’t as prominent during the last major inflationary period.
This tug-of-war between inflationary pressures and high interest rates suggests that volatility will be a key theme in the coming weeks. The Cboe Gold ETF Volatility Index (GVZ) has already climbed to a three-month high of 18.5, reflecting this tension. Traders should consider strategies like long straddles or strangles on gold ETFs to capitalize on a significant price move in either direction, rather than betting on directionality alone.
With slowing global growth forecasts for the fourth quarter, the fear of stagflation is becoming more pronounced, which historically is a very supportive environment for gold. For those with a bullish bias, using call option spreads could be a prudent approach. This allows traders to position for upside potential while defining their risk, should the strong US dollar and high rates unexpectedly win out in the short term.
