Record Gold Demand Amid Soaring Prices: What This Means for Investors and Businesses in Oman
Demand for gold reached a record high in the third quarter of the year, driven by geopolitical unrest and soaring prices, according to data released by the World Gold Council (WGC) on Thursday.
Total gold demand increased by 3 percent year-on-year during the July to September period, reaching 1,313 tonnes—the highest volume recorded since the WGC began tracking demand approximately 25 years ago. The precious metal’s status as a safe haven asset was bolstered by ongoing conflicts, including the Russia-Ukraine war and the Israel-Gaza crisis.
WGC analyst Louise Street attributed the surge to “various regional conflicts” and escalating trade tensions, which collectively have created an environment of uncertainty, thereby boosting gold demand. This increase in buying was particularly noticeable among central banks, coinciding with gold hitting record prices throughout the year.
Although gold peaked at an all-time high of $4,381.52 per ounce in October, it has since experienced a significant decline due to profit-taking. Nevertheless, gold demand by value surged by 44 percent year-on-year to a record $146 billion in the third quarter.
Analysts noted additional support for gold prices from factors such as the US government shutdown and expectations of further Federal Reserve interest rate cuts, which have exerted downward pressure on the dollar. Investment in gold via Exchange-Traded Funds (ETFs) also remained strong, providing investors a way to buy gold without engaging in futures markets.
However, the high price environment has negatively affected jewellery demand, which fell by 23 percent to 419.2 tonnes during the quarter—the lowest third-quarter level since 2020, when the Covid-19 pandemic began impacting global markets.
Louise Street described the recent price decline to around $4,000 per ounce as “a healthy correction” that helps eliminate some of the “frothy” and potentially short-term speculative trading activity.
Special Analysis by Omanet | Navigate Oman’s Market
The record surge in gold demand amid global geopolitical tensions highlights gold’s role as a safe haven asset, presenting an opportunity for Omani investors to diversify portfolios in uncertain times. However, the decline in jewelry demand signals a potential risk for retail sectors reliant on discretionary luxury spending. Smart entrepreneurs should now consider leveraging the strong ETF market trend for gold investments while cautiously navigating consumer market fluctuations.
