Kuwait offers particularly cheap gold compared to the rest of the world and the Asia region. Both local and international buyers contribute to the demand for gold in Kuwait, as in other Gulf Cooperation Council (GCC) countries. Kuwait’s gold price, however, is influenced by a number of factors, including global market prices, local taxation, and the strength of the Kuwaiti dinar.
Global Gold Prices:
Global gold prices determine Kuwait’s gold prices, since the country is a net importer of gold. Other factors that influence gold prices include supply and demand, economic conditions, geopolitical tensions, and investor sentiment. It is very common for Kuwaiti gold prices to rise along with global gold prices.
Local Taxation:
Gold imports in Kuwait are subject to import duties and value-added taxes (VAT) as are most GCC nations. As a result, gold prices in Kuwait are higher than in regions with lower or no taxes on gold imports. The current VAT rate in Kuwait is 5%, which applies to gold imports.
Strength of the Kuwaiti Dinar:
Kuwaiti dinar is among the most valuable currencies in the world, which affects gold affordability for local buyers. When the dinar strengthens against major currencies like the US dollar, which gold is typically priced, Kuwaiti buyers may find gold more expensive. Conversely, a weaker dinar can make gold more affordable for local buyers.
Gold Jewelry Market:
Kuwait has a flourishing gold jewelry market that caters to both locals and tourists. Demand for gold jewelry, especially during festive seasons and weddings, can influence gold prices. Moreover, markup on gold jewelry, which also includes design fees, labor costs, and profit margins for retailers, can make gold jewelry more expensive than raw gold.
Local Gold Souks:
In Kuwait, there are several traditional gold souks (markets) where buyers can find gold jewelry and bullion, such as the Souk Al-Thalath and the Souk Al-Mubarakiya. As a result of the numerous vendors and possibilities for negotiation, these souks often offer competitive gold prices in Kuwait. Buyers should, however, exercise caution and verify the authenticity and quality of gold they purchase from these sources.
Investor Demand:
Like many other countries, Kuwait has a growing number of investors who view gold as a safe-haven asset and a hedge against inflation and economic uncertainty. Investor demand can contribute to overall gold demand in the country and potentially influence prices.
While gold may be considered “cheap” in Kuwait by global standards, it is essential to remember that gold prices can fluctuate due to various factors, and buyers should carefully consider their budget and investment goals before making any purchases.