Gold High Season in Saudi Arabia: Sales Down by Half Y/Y

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(Reuters) – Hajj season in Mecca, Saudi Arabia is considered a high season for gold sales. However, this year’s gold sales in Mecca are down by 50% compared to the same period last year.

During the Muslim’s pilgrimage to Mecca each year for Hajj, Arab visitors buy gold as souvenirs from the holy city to their loved ones back home. It’s a tradition for Arab visitors to spend few days before Hajj shopping.

According to the local residents, around 2 million pilgrims shop from Mecca each year during this season. This year official numbers estimate around only 1.7 million pilgrims from outside Saudi Arabia, a weaker number than each year that affects gold sales. Local residents estimate the number of foreign visitors by merely one million.

Egyptian pilgrims were the most common gold buyers in Mecca during Hajj, accounting around 40% of the business. However, after the Arab Spring, they reduced the pace of purchasing gold due to economic difficulties.

Gold is still considered as a luxury item in the Arab World and the Middle East. It’s not surprising to see gold sales slashed during recessions in the region.

Another reason was the new constructions around the Grand Mosque in Mecca. The distance between pilgrims lodging and the gold Mecca’s high street increased with barriers placed around construction sites. This made the foreign visitors misses Mecca’s famous gold works and jewelers’ shops.

Moreover, the authorities reduced the number of foreign pilgrims this year by fifth, making the total number of pilgrims traveling to Mecca this year just above 3 millions.