Gold prices in Saudi Arabia increased on Monday, reaching 489.36 Saudi Riyals (SAR) per gram, and 5,707.77 SAR per tola. This rise is from Friday’s prices of 484.58 SAR per gram and 5,652.02 SAR per tola, as reported by FXStreet.

FXStreet bases Gold prices on international rates, adjusting them to the local currency using market rates at publication. These are reference prices; local variations may occur due to market conditions.

Gold as a Store of Value

Gold has long been a store of value and a medium of exchange. It is regarded as a safe-haven asset, offering a hedge against inflation and currency depreciation due to its independence from any issuer or government.

Central banks are prominent Gold holders, buying it to support economies and strengthen currency credibility. In 2022, they acquired 1,136 tonnes, worth $70 billion, marking the highest purchase on record, especially in emerging economies like China, India, and Turkey.

Gold typically inversely correlates with the US Dollar and US Treasuries. A weaker Dollar often boosts Gold, while stock market rallies can dampen its price. Geopolitical issues and recession fears can also impact Gold due to its safe-haven appeal, with interest rates influencing movements.

Given the recent strength in gold, we are seeing a classic setup for a continued move higher. The US Dollar Index (DXY), which we saw trading above 104 for much of 2024, has softened considerably and is now hovering around the 98 level. This sustained weakness in the dollar is creating a significant tailwind for assets priced in the currency, like gold.

Interest Rate Expectations and Market Speculation

As a non-yielding asset, gold is highly sensitive to interest rate expectations, and the market is now pricing in a potential Federal Reserve pivot. After the aggressive rate-hiking cycle we witnessed through 2023 to combat inflation, softening economic data is fueling speculation of rate cuts in the first half of 2026. Derivative traders should consider long-dated call options to capitalize on this potential shift in monetary policy.

We also see a strong floor of support from persistent central bank demand, which has continued its record-breaking pace since the 1,136 tonnes purchased back in 2022. The World Gold Council has confirmed that central banks, particularly from emerging markets, have remained net buyers through 2024 and 2025, absorbing any significant dips in the market. This consistent buying reduces the potential downside risk for bullish futures positions.

Furthermore, gold’s role as a hedge against inflation and instability remains critical for portfolio construction. With recent US CPI data showing inflation stubbornly persisting above the 3% mark and heightened geopolitical tensions in the Strait of Hormuz, the safe-haven appeal is increasing. This environment may warrant positioning through strategies like buying puts on broad market indices while establishing long gold positions.

The current uncertainty creates an ideal environment for volatility plays. Implied volatility in gold options may not fully reflect the potential for a sharp price move if the Fed signals a policy change sooner than expected. Traders could look at buying straddles or strangles to profit from a significant price breakout in either direction over the next few months.

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