THE price of gold – which has dropped since a high late last year upon news of Covid-19 vaccines – has triggered a wave of buying, causing a supply shortage, jewellers and retailers said.

The Federation of Goldsmiths and Jewellers Associations of Malaysia (FGJAM) said, as a result of the shortage, many shops are reluctant to accept new orders for gold jewellery, fearing they will not be able to deliver.

“Local manufacturers for gold jewellery and items have been asked to up production based on the popularity of gold now,” FGJAM president Steven Siow said.

“So merchants are encouraging customers to buy what is available and on display in stores, rather than order new designs. The fear is that we won’t be able to deliver the goods on time.”

He said local goldsmiths are also not promising deadlines to complete orders for jewellery and gold items due to the shortage of the metal.

The price of gold rose last year during the pandemic as investors chose it as a safe asset amid worldwide economic uncertainty.

It reached a high of US$2,075 (RM8,553) per ounce in August and then gradually declined as news about the development of Covid-19 vaccines broke.

As of March 9 this year, the international price was around US$1,700.

Domestically, Siow said that the current price of 916 gold is about RM240 to RM260 per gramme.

He also estimated that year-on-year performance for local gold jewellers and shops had increased by 30% compared to the same period last year.

Low stock now is also partly due to low output from gold jewellery manufacturers because only 50% of employees were allowed to work during the movement control order (MCO) period.

Exports of gold jewellery were also affected, he added.

“The gold business in Penang usually accounts for 80% of Malaysia’s exports of gold jewellery. The cost of exporting increased due to movement restrictions and border closures.”

Pre-pandemic, exports of gold jewellery were transported by hand on flights, but this was changed to using freight during the lockdown, resulting in added costs for insurance and other fees.

Many buyers of gold jewellery now are Malays, Siow observed. Chinese customers are few at the moment after the pandemic year last year saw banquets, weddings and big events cancelled. Gold jewellery is a traditional gift especially at weddings.

However, Siow said he is seeing the gradual return of Chinese customers since the Lunar New Year last month.

He added that industry players are expecting performance this year to be good since the gold buying trend is predicted to grow until the end of the year.

“This is probably because people have extra cash since they could not travel or take holidays due to the lockdown, while the government has assisted the people in increasing their cash flow.

“So those with extra money are choosing to buy gold jewellery.” – March 11, 2021.