Latest news with #SaxoBank
Arab News
13 hours ago
- Business
- Arab News
Saudi gold demand defies price surge amid cultural, digital shift
RIYADH: Gold prices may be at record highs, but that has not stopped Saudi consumers from buying. In the first quarter of 2025, demand for gold jewelry in the Kingdom jumped 35 percent year on year, even as global demand fell 21 percent, according to the World Gold Council. That surge comes amid a global price rally, with gold breaching $3,500 per ounce in April, up from around $2,370 a year earlier — driven by geopolitical tensions, inflation fears, and aggressive central bank buying. 'This rapid increase in the price of the bullion can be attributed to one main reason – central bank buying,' Vijay Valecha, chief investment officer at Century Financial, told Arab News. Yet despite the soaring cost, Saudi Arabia's deep-rooted gold culture continues to shine, with consumers purchasing 11.5 tonnes of gold jewelry in the first quarter, up from 8.5 tonnes a year earlier. 'This feat occurred despite the 34 percent rise in prices in early 2025, demonstrating Saudi consumers' strong demand and purchasing power,' said Valecha. Gold in the Kingdom is more than a financial asset — it represents tradition, adornment, and intergenerational wealth. From bullion bars to minimalist 18-carat jewelry, Saudi buyers are proving resilient even as other regional markets, such as the UAE and Kuwait, witness sharp declines in demand. Hamza Dweik, head of trading for the MENA region at Saxo Bank, emphasized gold's cultural role, telling Arab News: 'Gold is deeply embedded in Saudi traditions, especially during weddings and festive occasions. This cultural attachment ensures a steady baseline of demand, even during price surges.' Global factors Valecha explained that following the conflict in Ukraine, many countries grew concerned about holding excessive reserves in US dollars, prompting nations such as China and Russia to increase their gold purchases. 'China has spearheaded record levels of global central bank purchases of gold. Hence, looking ahead, the trend of gold buying by central banks is expected to continue,' he added. Another push came in May, when Moody's downgraded the US credit rating from Aaa to Aa1, citing 'a sustained increase in government debt (exceeding $36 trillion), rising interest payment ratios, and persistent fiscal deficits exacerbated by political dysfunction and policy uncertainty.' Valecha added that this marked the first time the US lost its top-tier rating from all three major agencies. Cultural drivers In different parts of the Kingdom, people buy gold for different reasons. In the north, around 70 percent of buyers view gold primarily as an investment, while in the south, it is more closely tied to tradition and adornment. Gold bars and coins are also gaining popularity, with people stocking their safes with bars of varying weights and purity. In the first quarter, gold demand in Saudi Arabia grew 15 percent year on year to 4.4 tonnes. Jewelry preferences are also shifting — from favoring diamonds to a growing obsession with gold. More young buyers are opting for 18-carat pieces due to their affordability, modern style, and lighter tone, as they appear less yellow than 21- and 24-carat gold. 'They also have a less flashy design/colour, which makes them better for everyday use,' Valecha explained. Digital platforms and online gold purchases are also on the rise, blending tradition with technology — from buying fractional gold and using savings apps to investing through exchange-traded funds. 'Younger generations are blending tradition with technology — embracing digital gold platforms, fractional ownership, and ETFs, while still participating in cultural gifting. This is reshaping how gold is marketed and consumed,' Dweik added. While countries including the UAE and Kuwait have seen gold demand decline, Saudi Arabia is moving in the opposite direction, with domestic consumers leading the surge, supported by strong spending habits. Consumer spending in the Kingdom hit an all-time high in March, rising 17 percent to SR148 billion ($39.44 billion) — the highest monthly increase since May 2021 — before easing to SR113.9 billion in April. The shift in consumer behavior is evident across the Kingdom. Jewelers in Riyadh spoken to by Arab News reported a growing interest in custom pieces, lighter-weight ornaments, and contemporary designs that suit both festive occasions and everyday wear. The 18-carat trend, once seen as a budget-friendly option, has become a fashion choice, according to the jewelers. More women are purchasing gold for themselves, breaking away from the traditional gift-only narrative. While physical stores remain popular for high-value purchases, particularly during wedding seasons and religious festivals, digital platforms are making inroads. Online retailers like L'azurde are adapting to this demand by offering buy-now-pay-later plans, making gold more accessible to a wider audience. Popular jewelry items include 21-carat necklaces and rings, while younger buyers favor 18-carat pieces for daily wear. Market outlook Looking ahead, both Valecha and Dweik expect prices to remain strong. Valecha predicts gold could reach $3,700 per ounce by year-end, though he cautions short-term investors. 'Buyers should assess their investment horizon — long-term holders may still find value, while short-term buyers should be mindful of volatility,' he said. 'Sustained central bank purchases, heightened investor appetite in a period of uncertainty in the economic landscape, and projected interest rate cuts drive this bullish projection. The projected price under a recession scenario is as high as $3,880 per ounce,' Valecha added. Dweik agreed, and said: 'While structural drivers support continued growth, potential corrections could occur if inflation eases or interest rates rise.' Saudi Arabia may also be poised to grow into a regional gold trading hub. Valecha believes that with the right infrastructure and regulatory framework, the Kingdom could play a larger role in the global market. 'To elevate its status, a modern, transparent gold market ecosystem and enhanced refining capabilities would be essential,' he said. With deep-rooted traditions, rising investment activity, and a modernized retail environment, Saudi Arabia's gold market is not only resilient — it is evolving. In a time of global uncertainty, gold continues to shine across the Kingdom.
Mid East Info
17 hours ago
- Business
- Mid East Info
Wheat rise on short covering and weather woes, but fundamentals still lacking – Saxo Bank MENA - Middle East Business News and Information
Ole Hansen, Head of Commodity Strategy, Saxo Bank Wheat futures in Chicago surged to a two-month high on Wednesday, driven by adverse weather across key growing regions in the U.S., Europe, and Russia, alongside signs of robust export demand—particularly into North Africa. The rally, which comes ahead of the U.S. holiday, has been amplified by hedge funds reducing long-held short positions in both CBOT and Kansas HRW contracts. Images of combine harvesters stuck in muddy fields underscore the slow start to the U.S. winter wheat harvest. Persistent rains across the southern Plains—especially in Oklahoma and Kansas—have delayed progress. In Oklahoma, just 5% of the crop had been harvested by early June, down sharply from 44% last year and well below the five-year average of 23%. Nationwide, only 10% of the winter wheat crop has been harvested—the slowest pace since 2019—compared with the seasonal norm around 18%, according to USDA. Despite the harvest delays, early crop quality and yields have exceeded expectations. The USDA this week also lifted its spring wheat condition rating to 57% good or excellent, up from 53%, suggesting no immediate threat to overall production. On the charts, the most traded September and December CBOT wheat contracts have approached key trendline resistance, at USD 5.94 and USD 6.19 respectively, with last trades at USD 5.905 and USD 6.12. Elsewhere, weather challenges continue to unfold. In Russia, drought-hit regions such as Krasnodar and Rostov have declared emergencies, fuelling protective buying in Europe. In Western Europe, spring rains have improved crop conditions but delayed ripening and harvest, while also raising the risk of disease. In response, the benchmark Paris Milling Wheat contract recently broke back above EUR 200/ton, last trading near a one-month high around EUR 208. Whether these developments mark a sustainable bottom around USD 5 (CBOT wheat) remains to be seen. So far, the main bid has come from funds reducing bearish exposure. Hedge funds have maintained a net short in CBOT wheat for three consecutive years, and in Kansas HRW since August 2023. In the four weeks to June 10, managed money cut its CBOT net short by 26% to 94k contracts, while the Kansas net short was trimmed by just 7% to 75k. As per the charts above, additional price strength leading to an upside break may add further momentum to the rally, not necessarily due to price-friendly fundamentals, but first of all due to buying as wrong-footed longs scale back bearish bets. For the rally to become more sustainable, thereby signalling a low in the market following three years of weakness, the global production outlook needs to deteriorate further, so for now we view the rally as technically more than fundamentally driven.
Mid East Info
2 days ago
- Business
- Mid East Info
Commodities strengthen into midyear as demand for hard assets heat up – Saxo Bank MENA - Middle East Business News and Information
Ole Hansen, Head of Commodity Strategy, Saxo Bank The commodities sector is closing in on a strong first half of 2025, with the Bloomberg Commodity Total Return Index rising 3% over the past week and up 10% year-to-date—marking its highest level since September 2022. This rally significantly outpaces other US dollar-denominated assets, with both equities and bonds lagging behind. Unlike typical commodity bull runs driven by economic expansion, the current upswing is being fueled by safe-haven demand, geopolitical tension, and renewed investor appetite for hard assets amid macro uncertainty. Broad gains despite macro headwinds The double-digit year-to-date return on the index, which comprises 24 major futures markets, split almost evenly between energy, metals, and agriculture, excluding platinum, the current star performer on 40%, has, as mentioned, been achieved despite heightened economic growth concerns, especially in the US and China, the world's top consumers of raw materials. In the chaotic days that followed Trump's 'Liberation Day' tariff attack on major trading partners, the index suffered a top-to-bottom drawdown of 9% before embarking on a recovery that now has led to a fresh high being reached, and in the last week supported by gains across all three sectors, led by crude oil, fuel products, gold, silver, soybeans, and wheat. Note: besides platinum, the star performer, the bottom three are not included in the BCOM TR Index. In comparison, the S&P 500 trades up by less than 2% and the Nasdaq by around 3% after suffering significant February to April drawdowns of 19% and 23%, respectively. Highlighting the reasons why a diversified approach to commodity trading and investment reduces the overall volatility, making it easier from a risk management perspective to maintain an exposure through peaks and troughs. Precious metal: Safe-haven star performers Precious metals are leading the charge, with platinum, gold, and silver at the top of the performance table. Silver recently broke above USD 37 per ounce, its highest level in 13 years, while platinum is up more than 40% year-to-date after breaking a 17-year downtrend last month. Gold, which back in April hit a record high at USD 3,500, has moved into a consolidation phase while awaiting the next potential bullish trigger. Despite the current lull, bullion continues to attract strong demand from central banks and long-term investors concerned about sovereign debt, inflation risks, and the weakening US dollar. Despite silver's recent period of strength, the gold-silver ratio remains elevated near 91, well above its 5-year average closer to 80, highlighting silver's relative catch-up potential if macro and technical tailwinds persist. Growing concerns around US fiscal sustainability, softening labour market data, and the threat of tariff-driven supply disruptions are reinforcing the case for hard assets. These conditions also strengthen the possibility of a more dovish shift from the Federal Reserve, potentially opening the door to rate cuts sooner and deeper than previously expected. In this environment, gold pushing toward the USD 4,000 mark over the next 12 months is no longer out of the questions. Energy: Geopolitical risk premium returns In the energy sector, prices have rebounded strongly this month, initially buoyed by seasonal summer demand tightening supply. This has helped offset bearish factors such as rising OPEC+ output and macroeconomic uncertainties. What began as a steady recovery—partly fueled by short-covering—turned volatile last week when Brent crude spiked as much as 13%, reaching USD 78.50 per barrel, after Israel launched a prolonged series of airstrikes on Iranian nuclear and ballistic missile facilities. Thereby reducing the chance of a negotiated solution between the US and Iran, which have centered almost exclusively on Iran's rapidly advancing nuclear program, with the core objective of these talks to limit Iran's nuclear activities—particularly uranium enrichment—in exchange for relief from US-imposed economic sanctions. With Iran vowing to respond with missiles and drone attacks and rising fears of US involvement in strikes on Tehran and its underground nuclear facilities, the escalation has once again raised fears of broader conflict in a region responsible for a third of global oil output. Tensions around the Strait of Hormuz—through which over 20 million barrels of oil transit daily—are the main focus. Pricing a market that on balance—without a disruption—should trade closer to or below USD 70 is difficult, which is why the options market is increasingly being used by professionals to hedge the outside chance of a disruption spike, with the cost of buying calls now exceeding puts by a bigger margin than they did after Russia's 2022 invasion of Ukraine. Agriculture: Biofuel link, weather, and short covering offering support Agricultural commodities continue to trade mixed, with a small 2.3% year-to-date gain in the Bloomberg Agriculture Index being primarily driven by strength across the livestock sector, while the index-heavy grain and soybean sector trades close to flat on the year. However, just in the past week, some strength has emerged with soybeans and corn catching a bid on the back of stronger energy prices, given the crop's role in the production of biofuels, while CBOT wheat touched a one-week high after a slow start to the US winter wheat harvest. Speculators—net short in wheat for three consecutive years—were forced to unwind positions, despite the broader grain complex still showing mixed performance year-to-date. Together with an extended short position in corn, traders of these two crops will look for signs of additional strength, forcing additional short covering from a technical and momentum-driven perspective. Looking ahead: Risks to second-half momentum Finally, it's worth mentioning that while we see the commodity market being in the early stages of a multi-year super-cycle, several obstacles may prevent the sector from achieving a similar return in the second half. The energy sector may turn lower on a solution to the Middle East war, while the global economic impact of Trump's tariff war, especially in the US, may have a dampening impact on the global economic outlook. Inadvertently, if materialise such weakness may drive down the dollar further while triggering a fresh round of US rate cuts, thereby supporting demand for hard assets through a reduction in the cost of holding a non-coupon or dividend-paying asset.
Bloomberg
3 days ago
- Business
- Bloomberg
Trump Weighs Iran Options as Israel Ratchets Up Airstrikes
President Donald Trump met with his national security team in Washington for more than an hour on Tuesday to discuss the escalating Middle East conflict, according to people familiar with the matter, fueling fresh speculation that the US is on the verge of joining Israel's attack on Iran. Trump spoke with Israeli Prime Minister Benjamin Netanyahu following the meeting, according to a White House official, as speculation swirled around how the US president might proceed. White House officials declined to comment or issue a statement following its conclusion. Today's guests: Ursula Marchioni, BlackRock, EMEA Head of Investment and Portfolio Solutions, Elsa Lignos, RBC Capital Markets Global Head of FX Strategy, Ole Sloth Hansen, Saxo Bank Commodity Strategy Head (Source: Bloomberg)
RTÉ News
3 days ago
- Business
- RTÉ News
Oil rises as Iran-Israel conflict keeps floor under prices
Oil prices rose today, with analysts saying that uncertainty would keep prices elevated, even as there were no concrete signs of any production losses stemming from the Iran-Israel conflict. Brent crude futures climbed 82 cents, or 1.1%, to $74.05 a barrel this morning, while US West Texas Intermediate crude was up 77 cents, or 1.1%, at $72.54. Both contracts rose more than 2% earlier in the trading session but also notched declines before bouncing back in volatile trading. Iran is the third-largest producer among members of the Organization of the Petroleum Exporting Countries and there is widespread concern the fighting could affect exports from there. Additionally, investors are watching for signs shipments through the Straits of Hormuz, through which flows about 19 million barrels per day of oil and oil products, may be impacted. "The market is largely worried about disruption through Hormuz but the risk of that is very low, said Saxo Bank analyst Ole Hansen. There is no appetite around closing it since Iran would lose revenue and the US wants lower oil prices and wants to lower inflation, he added. There have been no signs of supply losses but ships moving in the vicinity of the Strait and the Gulf have been affected by electronic warfare measures that have interfered with navigation systems. Earlier today, shipping sources said a vessel collided with two other ships sailing near the Strait of Hormuz, highlighting the risks to companies moving oil and fuel supplies in the region. Despite the potential for disruptions, there are signs oil supplies remain ample amid expectations for lower demand. In its monthly oil report released today, the International Energy Agency revised lower its world oil demand estimate by 20,000 bpd from last month's forecast, while increasing the supply estimate by 200,000 bpd from last month's estimate to 1.8 million bpd. Investors are also focusing on central banks' interest rate decisions, Tamas Varga, analyst at PVM Associates said in a note, with the US Federal Open Market Committee, which guides the Federal Reserves rate movements, set to meet later today.
