Gold Prices Surge Past RO50 for 24-Karat Gold in Oman: What This Rally Means for Investors and Businesses
Global stock markets declined on Tuesday, while traditional safe-haven assets such as bonds and gold saw increased demand, driven by growing investor anxiety over escalating tensions between the United States and China ahead of crucial trade negotiations. These high-stakes talks aim to establish a long-term trade agreement between the two economic giants.
Earlier in the day, market sentiments had improved following comments from U.S. Treasury Secretary Scott Bessent, who confirmed that President Donald Trump is set to meet Chinese President Xi Jinping for a two-day summit in South Korea starting October 31. However, Bessent intensified concerns with his interview in the Financial Times, accusing Beijing of actions intended to harm the global economy. Compounding the tensions, both countries began imposing port fees on ocean shipping companies handling a wide range of goods, from toys to crude oil, as negotiations escalated.
Gold Prices in Oman:
- 24-karat: RO51.750
- 22-karat: RO48.300
- 21-karat: RO45.100
- 18-karat: RO38.450
Investors are increasingly purchasing gold as a hedge against potential financial bubbles—whether linked to overvalued technology stocks, growing government debt, or rising inflation. However, some experts warn that the current gold rally itself may be becoming a bubble. The price of gold has surged by 56% this year despite a strong rebound in U.S. and global stock markets since April.
Initially, the surge in physical gold demand was attributed to global trade fears and geopolitical risks, particularly following Donald Trump’s return to the White House in January. Yet, this bullion boom has persisted even as stock markets have recovered and market uncertainty has somewhat eased. Factors such as lax fiscal and monetary policies worldwide—along with concerns over central bank independence—and the Trump administration’s apparent intention to devalue the U.S. dollar have also contributed to inflation worries, thereby enhancing gold’s appeal as a non-yielding asset.
Unlike stocks, gold lacks universally accepted valuation benchmarks, making it difficult to determine if prices have become excessive. Over the past decade, gold’s value has more than doubled, increasing by over 250%. The widespread bullish sentiment among investors—often a hallmark of market bubbles—raises questions about future price stability.
Recently, gold hit a record high of $4,100 per ounce. Despite this surge, major financial institutions remain optimistic, with Goldman Sachs forecasting a further 20% increase by the end of next year, Societe Generale anticipating a rise to $5,000 per ounce, and JPMorgan identifying gold as one of its strongest cross-asset investment convictions. However, if investors increasingly treat gold similarly to volatile tech stocks, skepticism arises about its role as a diversification tool—especially during potential equity market downturns.
As for the ongoing bullish trend, forecasts hinge heavily on supply and demand dynamics, particularly continued central bank purchases and inflows into gold exchange-traded funds (ETFs). Central bank demand appears structural and steady, but it remains uncertain how far this demand will extend. Private investor interest is more ambiguous: despite gold being the second most crowded trade after U.S. mega-cap tech stocks according to Bank of America, over a third of surveyed global asset managers hold no gold positions, and those with allocations average just 4.2%.
Some warning signs have emerged regarding the rapid pace of the price increase. JPMorgan notes gold’s recent rally has outstripped what would normally be expected from declining real interest rates alone, which typically boost gold’s appeal as an alternative safe asset. Although JPMorgan still recommends buying on dips related to real interest rate changes, both it and HSBC caution about the risks if the Federal Reserve’s terminal interest rate eventually rises, which could strengthen the dollar and suppress gold prices.
Moreover, despite recent trade tensions, economic policy and geopolitical uncertainty indices have fallen since midyear, but gold prices have scarcely retreated. HSBC suggests that any easing of global military or trade conflicts next year could dampen gold’s momentum. Technical analysis from Deutsche Bank indicates that the period from September to October may have marked a "peak in trendiness," with gold prices staying above trend levels longer than usual—a warning sign of potential market correction.
While no definitive peak has been declared, market watchers remain vigilant for signs of a downturn in the gold rally amid these mixed signals.
Special Analysis by Omanet | Navigate Oman’s Market
The ongoing US-China trade tensions and escalating geopolitical risks have driven a surge in gold prices, positioning it as a key safe haven asset for investors in Oman. However, with gold prices potentially reaching a speculative peak, businesses and investors should exercise caution, balancing gold holdings with diversified portfolios to mitigate risks from sudden market corrections. Smart investors in Oman must stay alert to global policy shifts and inflation trends, as these will heavily influence commodity and equity markets moving forward.
