PETALING JAYA: The recent drop in gold prices has sparked a gold rush at gold outlets and jewellers as investors try to take advantage of what they see as a temporary setback for the precious metal.
Gold prices have been dropping gradually for some time but hit its lowest in decades last week at US$1,345(RM4,082) per ounce.
Gold retailers have reported brisk selling in the past few days as investors stock up on anything gold, especially gold bars and coins.
They told The Malaysian Reserve that gold bars and coins have been in great demand that there is a shortage at the moment.
Diamond and gold retail chain Habib Holdings Sdn Bhd managing director Meer Sadik Habib said, “A lot of people are buying gold bars beside gold jewellery. The sale of gold bars has increased many-fold and there is even a shortage of gold bars.”
He said that the demand for gold as an investment has been very strong during the period.
Meanwhile, another leading jewellery chain Poh Kong ED Ermin DM Siow said: “We do see quite an encouraging response from the consumers ever since the gold price dropped.”
He said that the investors have taken the opportunity to stock up the investment gold products like gold wafers and coins, also gold jewellery.
Jewellers believe that the precious metal that looks bearish in the short term will recover to touch the US$1,700 (RM5,183) an ounce level by the end of this year.
While we still have to wait for that, gold continued its recovery for the third consecutive trading session in futures trade yesterday.
Gold in overseas markets, which normally set price trends on the domestic front, climbed 1.34% or US$18.80 to US$1,425.30 per ounce.
Last Friday, spot gold was up US$7.69 or 0.55% to US$1,398.18, but still ended the lowest since Feb 24, 2011, when many speculators are expecting it to breach US$1,800 per ounce this year.
The main reason for gold’s short-term weakness is the rise of the dollar due to the economic crisis in Europe and some think it is the fall that will continue for a longer time.
The dollar has also moved up on the hopes that the US economy is emerging from its crises, which could nudge the Federal Reserve to withdraw the stimulus package earlier than expected.
While the global outlook for gold is decidedly bearish in the short term because of the strengthening dollar, the situation could reverse if the US economy does not recover as expected.
