GCC 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 Ominvest, told AGBI.

The price of the precious metal has been rising in recent months and broke through the $3,200 mark on Friday.

Gold breached the key $3,200/oz level for the first time to scale a new peak on Friday, fuelled by a weaker dollar and an escalating trade war that sent investors rushing toward safe-haven assets.

Spot gold was up 1.3 percent at $3,216 an ounce, while US gold futures increased by 1.9 percent to $3,236.

Bullion has rallied by around a fifth 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.

• Safe-haven gold hits record peak after Trump’s tariffs
• Gold continues to soar as investors seek refuge
• Gold hits record high over trade war fears

“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.”