KUALA LUMPUR: Falling international gold prices and ongoing uncertainty in global financial markets are prompting questions about the outlook for Malaysia’s gold market, particularly as investors reassess their holdings amid a sharp sell-off in China’s technology sector.
China’s artificial intelligence (AI) stocks have come under heavy selling pressure, with the STAR 50 index falling about 40% in less than four months, wiping out an estimated US$480 billion (RM1.95 trillion) in market value, according to Reuters.
The sell-off has fuelled concerns over stretched valuations, speculative investment and whether the massive sums poured into AI infrastructure will eventually generate sufficient returns.
Against this backdrop, gold’s traditional role as a store of value during periods of market turbulence has come into focus.
However, the relationship between stock market declines and gold prices is not always straightforward.
Abdul Razak Gold House managing director Mohd Razalie Abdul Rasul said the recent correction in gold prices, coupled with uncertainty in global markets, underscored the importance of understanding how international developments affect prices of precious metals in Malaysia.
“Gold prices are influenced by many factors, including interest rates, currency movements and investor sentiment.
“When major financial markets experience significant corrections, consumers should look beyond the headlines and understand what these developments mean for the price of gold in Malaysia,“ he told SunBiz.
He said gold had traditionally attracted investors seeking to diversify their holdings during periods of economic uncertainty, but its price did not necessarily rise whenever equity markets fell.
During market corrections, investors may sell gold to raise cash, cover losses or rebalance their portfolios.
At the same time, expectations of lower interest rates or stronger demand for defensive assets could provide support for gold prices.
Mohd Razalie said China’s AI stock market correction was therefore worth monitoring, but it should not be taken as a direct signal that gold prices would move in either direction.
“For Malaysian consumers, the key question is how international market movements translate into the local gold price,“ he said.
He cautioned consumers against treating a decline in gold prices as a guaranteed buying opportunity or assuming that prices would automatically recover following a stock market sell-off.
“Gold ownership should be based on an individual’s financial circumstances and objectives, rather than a reaction to market headlines. Understanding the price you pay and the value you receive when selling is essential,“ Mohd Razalie said.
One factor that Malaysian buyers need to consider is the ringgit’s performance against the US dollar.
As international gold prices are quoted in US dollars, movements in the USD/MYR exchange rate can influence the price consumers pay locally.
A stronger ringgit could make gold cheaper in local currency terms, while a weaker ringgit could partly offset a decline in international gold prices.
The retail price of gold jewellery also depends on more than the international spot price.
Gold purity, manufacturing costs, dealer pricing and product premiums can all affect the final price.
For consumers considering buying or selling gold, Mohd Razalie said comparing local buying and selling rates was particularly important during periods of market volatility.
He added that the recent correction in gold prices, alongside the sell-off in China’s AI stocks, highlighted the need for consumers to understand the relationship between global financial markets, currency movements and physical gold ownership.
“For consumers waiting for a more affordable opportunity to buy gold, a price correction may warrant closer attention to local gold prices,“ he said.
However, he advised Malaysians not to make purchasing decisions based on expectations of an immediate price rebound.
“Whether you are buying gold jewellery, purchasing gold bars or considering selling existing gold, it is important to understand the current market price, the applicable buying and selling rates and your own reasons for owning gold,“ Mohd Razalie said.
