PETALING JAYA: Malaysians are still flocking to jewellery shops despite the price of gold breaching the US$2,000 (RM8,383) per ounce threshold for the first time in global history this week.
Federation of Goldsmiths and Jewellers’ Associations of Malaysia adviser president Ermin Siow said demand had been bolstered by local retailers, who had been careful not to proportionately increase the gold retail price.
He noted the price of gold had increased by more than 35% this year.
“In fact the gross margins have been reduced to as low as 11% to 12% now, instead of the normal 18% to 20%, ” he said.
He said gold jewellery was being sold between RM270 and RM290 per gram as of yesterday.
“Three months ago the retail price was between RM230 and RM240, ” he said.
Siow said there were brisk sales at outlets in Malay majority areas, especially during the Hari Raya Haji period.
“However, shops in urban areas are not doing as well, ” he added.
SMS Deen Group chief executive officer Mohamad Shaifudeen Mohamed Sirajudeen expected the price of gold to increase if the value of the US dollar drops further.
“Gold price and the US dollar are inversely related. When the US dollar weakens the price of gold tends to go up.
“And as the price of gold has breached US$2,000 per ounce, the sky is the limit now, ” he said.
Shaifudeen, however, cautioned people not to resort to panic buying.
He warned drastic increase in price could also result in a price crash, which happened in 2011.
In July 2011, gold price hit an all-time high of US$1,800 per ounce but dipped to US$1,100 per ounce by December 2015.
"Those who bought gold at the peak lost 40% then, but the price appreciated tremendously over the next few years before hitting all-time high this year," he said.
Shaifudeen said he had also experienced selling gold at a loss because of the volatile market.
“My advice is, don’t resort to panic buying, ” he said.
Shaifudeen said people prefer to buy gold as a form of investment.
“Although the market is volatile, the gold price would continue appreciating in the long run, ” he said.
Shaifudeen said the gold export market was adversely affected because of the Covid-19 pandemic.
“But thanks to social media, we can continue attracting sales by showcasing trending designs.
“We are now targeting the Malay and Indian markets. As the demand will always be there, especially for weddings.
“Even when the price is high, people are still buying.
“Customers can also enjoy a better return when they trade in old jewellery, purchased at a much lower price years ago, ” he said.
Shaifudeen said the moratorium on loan repayments was also helping drive the retail market.
“People are using the extra money to buy gold, among others.
“It is good for the economy when people continue spending, ” he said.
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