GEORGE TOWN: The exports of Malaysian-made gold jewellery are expected to shrink as consumers adopt a wait-and-see stance due to rising gold prices and tensions from the conflict in the Middle East, says Penang Goldsmith Association (PGA) adviser Joeson Khor.
The value of the exports in 2023 is unlikely to touch RM6bil compared with RM6.43bil in 2022 due to high gold prices, he added.
According to Khor, high gold prices will deter consumers from buying jewellery, and the Israel-Hamas war will also dampen consumer confidence.
Gold price per ounce is trading at US$1,977 currently compared with US$1,748 a year ago.
“Consumers would want to wait for gold prices to soften before shopping for gold jewellery products,” he said.
Gold prices are likely to increase to about US$2,000 per ounce by the end of 2023 now that the US Federal Reserve has kept the interest rates steady at 5.25% and 5.5%.
The Israel-Hamas war will spur investors to buy gold as a hedge against inflation, taking advantage of the existing interest rates, according to Khor.
“The sales of gold jewellery will drop, affected by high gold prices.
“We can see the United Arab Emirates (UAE) buying less from Malaysia from January to August.
“The UAE has slipped to the second spot after Singapore.
“The conflict in the Middle East will slow down the demand from the UAE,” he said.
The top buyers of Malaysian gold jewellery products for the past eight months in 2023 are Singapore, the UAE, Australia, Japan and Hong Kong.
According to Khor, Singapore will remain a top buyer of Malaysian gold jewellery products primarily because of a weaker ringgit that yields attractive exchange rates.“Singapore also buys from Malaysia to re-export to the United States as it has the quota to sell there due to its free trade agreement with the United States.
“Singapore is next to Malaysia, which makes it easier for our gold traders to cross the border and conduct transactions.
“The forecast for 2023 is that the Singaporeans will spend US$1.2bil (RM5.3bil) on jewellery products, of which 40% or US$504mil (RM2.2bil) are for luxury jewellery comprising gold, platinum, and silver,” he said.
From January to August, Malaysia External Trade Development Corp statistics showed that Malaysia exported about RM4.41bil worth of gold jewellery in 2023 compared with RM4bil in the 2022 corresponding period.
The export increased slightly because of the worldwide trend that saw rising demand from the wedding industry,
“Wedding gold jewellery demand improved amid the relaxation of Covid-related restrictions; the wedding industry has reportedly been operating at full capacity in 2023.
“Worldwide jewellery consumption managed a modest improvement despite the high gold price environment, up 3% year on year at 476 tonnes,” Khor said.
About 80% of Malaysian gold jewellery exports come from Penang-based manufacturers and exporters.
More than 60% of the 650 PGA members are small and medium companies with an annual turnover of less than RM25mil.
