AS gold prices continue to soar to stratospheric heights, Asian brides are seeing their traditional wedding gifts of gold jewellery becoming lighter and smaller.
Gold outshone most commodities in 2010, setting a new record of US$1,431.25 (RM4,414.69) per ounce on Dec 7 last year.
The precious metal is expected to continue to roar ahead in the new year as both investors and the man on the street buy up gold amidst uncertainties over global economic growth, which continues to be weak.
“I have not even hedged my gold,” Datuk Seri Andrew Kam, chairman and chief executive officer of Peninsular Gold Limited, told Sunday Starin an interview.
Peninsular Gold is one of the country’s largest gold producer.
“Gold prices are being driven by uncertainties in the currencies, especially the US dollar, and the upward movement of oil prices,” said Kam.
He expects demand to remain strong, particularly from China, India and the Middle East.
Gold started on its upward trajectory around 2004 when it traded between US$260 and $300 per ounce.
Soaring gold prices have impacted a wide spectrum of Asian life – from pawnshops to wedding gifts.
Despite its high price, friends and relatives of Asian brides are still keeping up with the tradition of giving away gold jewellery.
According to Poh Kong Jewellers, one of Malaysia’s largest jewellery retail chain stores, people still spend the same amount of money but are buying smaller items.
“People are buying lighter weight items,” said Margaret Hon, Poh Kong’s head of corporate communications.
Poh Kong’s gold wafers, named Bunga Raya, have also seen brisk sales as buyers snap them up as investments.
“We sell them in weight ranging from 1g to 100g,” said Hon.
“Whenever the global currencies are weak, people turn to gold as an investment. They also see gold as quite a safe hedge against inflation,” she said. - By AMY CHEW
Thestar - 2 January 2011
Gold Prices Expected to Increase by 2011
December 28, 2010 By james
Based on the 2010 Global Gold Price Survey Report by PwC, mining firms worldwide expect gold prices to increase even with the current high gold prices.
The report indicated that most gold firms anticipate their projected levels of production to increase in 2011. Almost 75 percent gold mining firms anticipate an increase in gold prices in 2011 even as the current price level is lower than the 1980 levels. Gold companies foresee gold prices reaching $3,000 even as forty percent think gold prices will top $1,500 based on the November 2010 survey.
According to John Gravelle of PwC, with the increased demand for gold, gold firms with marginal gold stocks may increase production to meet the possible demand for gold in 2011.
Seventy percent of gold companies aim to search for new ventures or enhance the ones on hand or resupply gold stocks in anticipation of the increase in gold prices. Gravelle added that there is a link between increasing numbers of deals and increasing gold prices as more deals have been made during the year.
Problems in some currencies may have caused the current increase in gold prices as some countries have now utilized gold to replace these currencies. Countries with gold resources have used these resources to lessen their currency value while countries without resources are also trying to reduce their currency value to help their export industry.
A number of gold firms view gold price hedging unfavorably even as 26 percent of firms lock in gold prices through forward sales contracts despite a possible increase in gold price in 2011. Around 64 percent are obliged due to financial requirements.
Gold price hedging was limited due to the increased gold prices as shown by the elimination of hedge books by a number of gold firms in 2010.