Gold touches 3-month high as Oman traders feel the pinch

MUSCAT: Gold prices climbed to a more than three-month high on Monday, pushing the 24-carat rate in Oman to OMR59 per gram and leaving jewellery traders facing a fresh slowdown in customer demand as high prices weigh on purchases.

The surge in international bullion prices quickly filtered into Oman’s retail market, with 21-carat gold trading at around OMR51 per gram on Monday evening. The latest rates remain below the record levels seen earlier this year, but traders say the sharp rise from recent lows is already affecting buying decisions.

“People allocate a budget for purchase. So, with the rates high, the purchase has significantly come down,” Mohammed of Al Haseena Jewellery told Times of Oman.

A gold trader on Ruwi High Street also said the rise in prices has affected trading activity, with customers increasingly holding back from purchases because of the higher cost.

The latest move marks a sharp turnaround from June, when gold prices in Oman had fallen considerably from their January peak, giving consumers some relief.

At the end of June, 24-carat gold was around OMR51.3 per gram, after reaching OMR70.2 per gram on January 29.

The local market has since seen prices climb again as international bullion regained momentum.

The latest rise comes as gold prices reached their highest level in more than three months globally on Monday.

Spot gold rose 0.8% to $4,641.27 per ounce, after touching its highest level since May 15. US gold futures were up 0.4% at $4,697.70. Gold had gained more than 5% last week.

For Oman’s jewellery sector, however, higher bullion prices do not necessarily translate into stronger retail business.

Traders say consumers tend to work within fixed budgets for jewellery purchases, meaning a higher price per gram can result in smaller purchases or delayed buying. The impact is particularly noticeable when customers compare current rates with the lower prices available only a few months ago.

The international rally is being driven in part by a weaker US dollar, which makes gold more attractive to buyers holding other currencies. Markets are also awaiting US inflation data and remarks from Federal Reserve Chair Kevin Warsh later this week for clues about the direction of interest rates.

A weaker dollar has traditionally supported gold because bullion is priced in the US currency. Investors are also watching developments in the US bond market and broader economic and geopolitical uncertainty.

For Oman’s jewellery retailers, though, the immediate concern is less about gold’s investment outlook and more about the impact on shoppers walking into their stores.

With the metal price once again approaching elevated levels, traders say customers are becoming more cautious, postponing purchases or reducing the quantity they buy.