Middle East Strategy
For many years, the Saudi Arabian economy has been dependent on oil. Mining will play a vital role in Vision 2030’s commitment to significantly diversifying the country. Gold, silver, copper, and other essential metals are among the natural resources that the government intends to exploit, which are estimated to be worth $2.5 trillion.
There will be implications for the entire world. To increase exploration and production, Saudi Arabia has collaborated with firms from across the world.
Saudi Mining and The Price Of Gold
- The gold price per ounce is stable because central banks and investors want stability in the face of economic uncertainty. On the other hand, if Saudi Arabia increased its production, prices may go down in the long run since there would be more oil on the market.
- Because of its role as a safe-haven asset, the price of gold is more influenced by the state of the macroeconomy than by fluctuations in supply. Gold bullion rate will be driven by inflation, interest rate policies, and geopolitical factors, even though Saudi Arabia is increasing its supply.
- It is feasible that Saudi Arabia’s mining industry would grow and not hurt future markets, but instead help them stay stable. This would provide the world economy a new base at a time when South Africa and Australia are seeing ore grades drop and costs rise.
Prospective Implications for the Gold Market
Growth in Saudi Arabia’s mining industry is essential. As central banks acquire gold at unprecedented amounts, investors are looking for potential hedges against inflation and currency risk. Since demand is higher than supply, the price of gold may increase even if Saudi Arabia increases its supply.
The Saudi Arabia also intends to develop refining and downstream processing services. This may alter the gold and bullion trade in the United States by lessening the reliance on refining plants located elsewhere. Because of the recent logistical difficulties, questions have been raised concerning supply chains on a worldwide scale. It would be beneficial for them to have a more diverse refining network.
