Gulf investors bank on gold as US-China tensions escalate

Gulf joins the gold rush

Perceived safe haven asset

Prices could reach $8k per ounce

Gulf investors are joining the gold rush as they look for a safe haven amid the biggest swings in global markets since the Covid pandemic and the 2008 financial crisis.

“Demand for gold in the region remains elevated despite the high price levels, likely a sign of rushing to safety,” Azza Al Habsi, an economist at Omnivest, told AGBI.

The price of the precious metal has been rising steadily since it first crossed $2,000 per ounce in April 2023 and $3,000 in March. Though it dipped to below $3,000 after President Donald Trump’s April 2 announcement about higher US tariffs, it resumed its climb on Wednesday after his partial tariff reversal.

Spot gold was up 1.2 percent at $3,120.01 an ounce on Thursday morning, while US gold futures increased by 1.9 percent to $3,137.20.

Bullion has rallied more than 18 percent so far this year, lifted by a mix of Trump’s tariff plans, expectations of monetary easing by the US Federal Reserve, geopolitical tensions in the Middle East and Ukraine, central bank buying and increased investments in gold-backed exchange-traded funds.

“Gold is clearly reemerging as the safe haven of choice this year,” said Wael Mahdi, CEO of Saudi consultancy Elevare360.

Analysts in the Gulf and beyond say there may be significant upside ahead. Prices could surge to as much as $8,000 per ounce over the next few years, according to Juerg Kiener, managing director and chief investment officer at Swiss Asia Capital, quoted by CNBC. 

Banks across the Gulf are noting a shift in client sentiment.

“Historically, clients have been underexposed to gold,” said Deepak Mehra, chief economist at Commercial Bank of Dubai. “But in recent months, we have seen growing interest to add some allocation to gold and gradually build that exposure.”

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