KUALA LUMPUR (March 20): A renewed appetite for safe-haven commodities is fuelling a rally in jewellery counters on Bursa Malaysia, as the precious metal shot up to US$2,009.59 per ounce following the banking crises in the US and Europe that jolted equity investors.
Jewellery counters edged higher on Monday (March 20), as equities have come under pressure due to the effects of a banking turmoil that was triggered by the failures of Silicon Valley Bank and Signature Bank in the US, indicating anxious investors who weigh risk are turning to the safe-haven asset, which traditionally stores better values.
On the local front, renowned jewellery makers surged — Tomei Consolidated Bhd by some 11% and Poh Kong Holdings Bhd by some 12% — due to higher buying interest.
Shares in Tomei, which has a retail network of 57 outlets in Malaysia, jumped the most in 13 months, adding 12 sen to RM1.24 from RM1.12 at last Friday’s close.
Tomei and Poh Kong were among the top 13 gainers alongside the GoldETF, which inched up 4% to RM2.82.
Poh Kong advanced the most in 22 months to 97.5 sen per share, an increase of 10.5 sen from its previous close at 87 sen last Friday, with 27 million shares done.
Tomei’s wholly owned subsidiary and gold jewellery wholesaler YX Precious Metals Bhd, which was listed on the ACE Market in June 2022, rose 7.5% or two sen to 29 sen per share, with a trading volume of 25.63 million shares.
Senior market analyst of broker firm FxPro Alex Kuptsikevich said that in just 10 days, gold has risen by 11% or around US$200.
“At the start of the day on Monday, the price was approaching US$2,010 [per ounce]. Historically, this is thin-air territory for gold. Despite the threat of a short-term pullback to replenish the bulls' positions, the medium- and long-term trends are up, opening the potential for gains to the US$2,200 area as a medium-term benchmark and US$2,500 as a long-term benchmark,” he said in a note on Monday.
He added the problems in the US and Swiss banking sectors have triggered a frenzy of demand for gold and cryptocurrencies.
“The risk of default on large deposits has increased, although so far, it has mainly been the holders of stocks and bonds of troubled banks who have suffered losses rather than depositors,” he said, adding the long-term picture for gold is also bullish.
Year to date, gold price had shot up by 9.18% from US$1,823.59 per ounce on Dec 30, 2022.
Gold is currently trading at its highest in the last 11 months, compared with its last peak of US$2,050.76 per ounce on March 8, 2022, after the global banking crisis drove more investors towards safe havens.
Last week, Silicon Valley Bank, a medium-sized bank little-known outside tech start-ups, crashed two days after depositors rushed to withdraw their money.
And then there is the Credit Suisse Group AG crisis. The Swiss bank’s shares plummeted after acknowledging “material weaknesses” in its internal controls last Tuesday.
Its rival UBS Group AG has now agreed to buy Credit Suisse in an emergency rescue deal aimed at stemming financial market panic unleashed by the failure of the two US banks earlier.