A worker arranging some jewellery at the gold jewellery shop in Kuala Lumpur. — FAIHAN GHANI/The Star
GEORGE TOWN: The exports of Malaysian-made gold jewellery are expected to grow by at least 15% this year from 2023.
Penang Goldsmith Association (PGA) adviser Joeson Khor said the US Federal Reserve (Fed) is unlikely to raise interest rates this year, which would make it easier for investors to borrow and hold on to gold for a long period.
In 2023, Malaysia exported RM7.7bil worth of gold jewellery products compared to RM7.39bil in 2022, according to the Malaysia External Trade Development Corp (Matrade).
From January to February 2024, Malaysia exported RM1.29bil worth of gold jewellery products compared to RM1.09bil in the same period of 2023.
“The Fed has most likely completed its most aggressive rate-hiking campaign in four decades, bringing interest rates to a 23-year high of 5.25% to 5.5% after 11 rate hikes.
“After focusing on inflation for the past two years, Fed officials may start to shift their focus to minimising harm on the job market, with unemployment edging up and the economy normalising,” Khor said.
Khor added that gold was a highly liquid asset without credit risk or liability, with its value preserved over time.
“Gold also benefits from diverse sources of demand: as an investment, a reserve asset, jewellery and a technology component. These attributes mean gold can enhance a portfolio in three key ways: delivering long-term returns, improving diversification and providing liquidity,” he said.
Since January 2024, the central banks in Turkiye, China, Jordan, the Czech Republic, Kazakhstan and India have increased their accumulation of gold by 39 tonnes, according to the World Gold Council 2024 report.
“If this trend continues, we can see gold prices shooting up to US$2,500 per ounce from US$2,309 per ounce currently.
“The gold price will then meet its resistance level,” Khor said.
According to the 360 research report titled Gold Jewellery Market 2024: Trends and Future Growth Analysis, the global gold jewellery market size, estimated to be worth US$2.4bil in 2023, is forecast to grow to US$2.9bil by 2031, growing 3.8%.
The Matrade report also showed that Singapore, the United Arab Emirates, the United Kingdom, India and China were the top buyers of Malaysian gold jewellery products.
Khor also added that the postponement of the high-value goods tax in Malaysia would stimulate domestic buying.
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.
Khor said following its 0.3% decline in February, gold reached an all-time high in early March, rising by more than 6% in the first week of the month and at the time of writing was trading well above US$2,100 per ounce.
“The price increase can, in part, be explained by the dollar weakness, a decline in US Treasury yields, an increase in market volatility, weak US economic data print and other factors such as ‘technicals’ and over-the-counter activity,” he said.
