Penang Goldsmith Association (PGA) adviser Joeson Khor said that since the price of gold had dropped drastically within a short period, most customers would adopt a “wait and see” attitude before buying.
“They are waiting to see whether gold prices would drop further. When gold prices shoot up too fast as in June, they hesitated to buy.
“For example, wholesalers in Dubai will have to pay more for gold bars to be used in exchange for Malaysian-made gold jewellery.
“Usually they would start buying again when the price of gold stabilises,” Khor said.
According to Malaysia External Trade Development Corp statistics, from January to September, the value of Malaysian gold jewellery export hit RM4.69bil, up from RM4.44bil registered for the same period of 2018.
The top buyers of Malaysian gold jewellery are the United Arab Emirates, Singapore, Hong Kong, Thailand, and Japan.
During the nine-month period, Malaysia imported RM1.82bil worth of gold jewellery compared with RM1.35bil in the same period of 2018, according to Malaysia External Trade Development Corp statistics.
“The price of gold started to drop in early November because there were some positive signs indicating that the United States and China may close an interim trade deal.
“Another reason for the drop was because JP Morgan Securities and Citigroup Inc have eased their gold hedge positioning.
“Also, the US feds won’t be cutting in bank rates in the near future, which would make the cost of holding gold in the long term expensive.
“When the price of gold hit US$1,550 in late October, it hit the resistance level, which means that there is pressure on those who have been holding gold to sell and take the profit.
“And finally, we are also seeing a lot of money going back to equities,” Khor added.
About 80% of Malaysian gold jewellery exports come from Penang-based manufacturers and exporters.
Khor said more than 60% of the 650 PGA members were small and medium-sized companies with an annual turnover of less than RM25mil.
According to a World Gold Council’s recent report, the demand for gold jewelry dropped 16% year-on-year (y-o-y) in the third quarter to 460.9 tonnes.
“Consumers were deterred from making fresh purchases during the quarter as the price rally – which began in June – gathered momentum.
“The quarterly average gold price in Q3 was US$1472.47 – 21% (or US$259.3/oz) higher y-o-y.
“This price pressure was exacerbated by concerns over the health of the global economy, which encouraged many consumers to moderate buying plans.
“Bright spots were few and far between, with most markets seeing significant year-on-year declines, particularly in Asia and the Middle East,” the report added.
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