KUALA LUMPUR (March 1): Gold is expected to climb further to hit US$2,200 per ounce by the end of 2024, after jumping nearly 14% to an all-time high of US$2,077.49 at the end of 2023, before closing the year at US$2,062.98 per ounce on Dec 29, compared with US$1,814.95 a year ago.
Gold price dived to below US$2,000 for the first time this year to US$1,992.33 on Feb 14, before rebounding to US$2,046.14 at the time of writing on Friday (March 1), gaining back US$53.81 or 2.7% over two weeks.
Expectations for the precious metal's continued rally is driven by safe-haven demand as geopolitical tensions in the Middle East and Europe persist, said Malaysia Gold Association (MGA) president Datuk Wira Louis Ng Chun Hau.
“Global central banks have been buying gold, which is one reason for gold prices to remain elevated and set to rise further. This is on the back of a volatile market due to the trade war between China and the US as well as the conflict between Israel-Hamas and Russia-Ukraine, which increased gold's appeal,” Ng told The Edge when contacted.
Gold is also seen as a hedge against inflation, said Ng, who is also the founder of Public Gold Group, which provides and manages gold trading activities including mining and refining.
As inflation stays elevated, there will continue to be demand support for gold, he said.
“For Malaysians, the ringgit's continued weakening has provided support for gold demand as people are investing in physical gold coin and gold bar to hedge against the local currency's depreciation,” he added.
Expectation of interest rate cut from the US Federal Reserve has also fueled the gold climb.
As for Malaysia's imminent high-value goods tax, Ng said that only impacts the jewellery market. For the commodity itself, it is seen as an instrument of investment so it is exempted from the high-value goods tax, he explained.
“So, demand for gold will grow as people will continue to buy gold products as a hedging tool against the depreciation of the ringgit,” he said.
The proposed high-value goods tax is expected to come into force on May 1, 2024 at a rate of between 5% and 10%. It was announced by Prime Minister-cum-Finance Minister Datuk Seri Anwar Ibrahim during the tabling of Budget 2024.