Logo of Phnom Penh Post newspaper Phnom Penh Post - Gold losing its lustre among customers as prices soar

Gold losing its lustre among customers as prices soar

Content image - Phnom Penh Post
Abiraame Jewellers director Arun Arunachalam serving a customer at his shop in Singapore’s Little India on Thursday. KUA CHEE SIONG/THE STRAITS TIMES

Gold losing its lustre among customers as prices soar

Getting your hands on gold is becoming an increasingly expensive endeavour and buyers have become reluctant to loosen the purse strings – much to the concern of jewellers in Singapore.

Sales of gold-based products in Singapore have fallen by as much as 20 per cent since the precious metal’s price started going through the roof in recent months.

Abiraame Jewellers director Arun Arunachalam said the company had rolled out promotions ranging from gold buy-back schemes to free silver coins in the lead-up to Deepavali on Sunday to encourage customers to spend.

“Hopefully, they will see something they like when they are here and pick up a few more items,” he said.

His shop has also started organising fashion shows to showcase its products.

Attracting customers

Gold has shot up to around $1,500 an ounce, a 17 per cent rise since the start of the year, largely due to uncertainties stemming from the Sino-US trade war.

The last time it reached these levels was in 2011 when an ounce cost $1,900, after buyers sought a store of value amid fears of runaway inflation.

Other jewellers are also taking measures to draw customers.

Ho Bee Goldsmith & Jewellery business manager Jessica Chia said she is picking trendy items that she hopes are more in tune with what customers want.

Optimistic that business will pick up, she added: “If they like the design, they will buy it.”

Ngee Soon Jewellery executive director Jan Ho said jewellers are bringing in quality items that are lighter to meet demand.

“This ensures that customers can get what they desire at the price they can afford as prices hike,” she added.

Ho said purchases nowadays are spurred by occasions such as weddings, birthdays and baby showers whereas customers in the past would have bought the items as an investment or for future generations.

She said the situation this year is different from when gold soared in 2011 because now there is real economic uncertainty and the increasing likelihood of a global recession.

Customers were still buying gold despite its rising price in 2011, she added.

Hock Wah Jewellery general manager Teo Yong Ping said: “Customers are more hesitant about buying things [given the economic uncertainty].”

But craftsmanship still counts when customers decide to buy a piece of jewellery, he added.

Ultimately, customers are looking for a good deal, he said. “They want beautiful things at a good price.”

It is up to retailers to find the right balance to attract more sales, he added.

‘Optimistic on gold’

But not all businesses that deal with gold are seeing fewer customers.

ValueMax’s executive director Yeah Lee Ching said its pawn-broking business has been doing better, though she did not provide specific figures.

“More investors are interested to park their money in gold as many market analysts are optimistic on gold,” she said, adding that: “ValueMax has increased the gold and jewellery in our showcases for sales.”

Factors such as low interest rates, economic uncertainty and gold purchases by central banks in Poland, China and Russia among others, have put a shine on gold.

OCBC Bank economist Howie Lee said: “The constant anticipation that [Sino-US] trade talks will quickly turn sour is a key reason why the appeal of gold is high.”

Another factor driving up demand is ongoing risk aversion from Brexit and geopolitical issues, economists said.

Gold is also set to benefit in this environment of low to negative real interest rates, said DBS Bank strategist Jason Low in a report for the fourth quarter.

“Historically, when real rates decrease, gold prices generally increase,” Low added.

He noted that policies by central banks in the US, the euro zone and Japan in recent years have driven interest rates to zero.

“Against the backdrop of an unpredictable tug of war between easy monetary policies and geopolitics, gold will be favoured as an effective portfolio diversifier,” Low said.

Economists added that central banks in Asia and emerging markets are also increasing their foreign reserve allocation into gold, which increases demand for the metal.

Banks are also optimistic about gold’s rising value, with some expecting prices to hit $1,650 per ounce by next year.

DBS chief investment officer Hou Wey Fook said: “We are constructive on the outlook for gold.”

There has been a 10 per cent increase in the volume of gold-related transactions at United Overseas Bank so far, compared with the same period last year.

Retired engineer CK Lee, 67, invested S$20,000 (US$14,700) in gold last month on the advice of his financial adviser and family members.

The alternative was to invest in stocks, he said, adding that he picked gold because he was not sure what companies to bet on.

“Maybe I am an old-time investor who still thinks that gold is a very safe asset. In an uncertain world, it feels nice to know that you have invested in a metal that you can touch and feel,” he said.

THE STRAITS TIMES (SINGAPORE)/ASIA NEWS NETWORK

MOST VIEWED

  • Wing Bank opens new branch in front of Orkide The Royal along Street 2004

    Wing Bank celebrates first anniversary as commercial bank with launch of brand-new branch. One year since officially launching with a commercial banking licence, Wing Bank on March 14 launched a new branch in front of Orkide The Royal along Street 2004. The launch was presided over by

  • Girl from Stung Meanchey dump now college grad living in Australia

    After finishing her foundational studies at Trinity College and earning a Bachelor’s degree from the University of Melbourne in 2022, Ron Sophy, a girl who once lived at the Stung Meanchey garbage dump and scavenged for things to sell, is now working at a private

  • Ministry orders all schools, public and private, to close for SEA Games

    From April 20 to May 18, all public and private educational institutions will be closed to maintain order and support Cambodia's hosting of the 32nd SEA Games and 12th ASEAN Para Games, said a directive from the Ministry of Education, Youth and Sport. Cambodia will host the

  • Wat Phnom hornbills attract tourists, locals

    Thanks to the arrival of a friendly flock of great hornbills, Hour Rithy, a former aviculturist – or raiser of birds – in Kratie province turned Phnom Penh tuk tuk driver, has seen a partial return to his former profession. He has become something of a guide

  • Almost 9K tourists see equinox sunrise at Angkor Wat

    Nearly 9,000 visitors – including 2,226 international tourists – gathered at Angkor Wat on March 21 to view the spring equinox sunrise, according to a senior official of the Siem Reap provinical tourism department. Ngov Seng Kak, director of the department, said a total of 8,726 people visited Angkor Wat to

  • Angkor Beer strengthens national pride with golden new look and fresher taste

    Angkor Beer – the "Gold of Angkor" – has a new look, one that is more stylish and carries a premium appeal, as well as a fresher taste and smoother flavour, making it the perfect choice for any gathering. Angkor Beer recently launched its new design, one