All About The Price Of Gold In Malaysia And What Affects It
Gold is one of the great traditional forms of saving or investing. Traditionally, families offered gold jewelry to the newlyweds as a sign of good luck, but also as an emergency fund for rainy days.
Modern investors view gold as a safe investment for risk showers. The price of gold is not rising very quickly, but it is appreciating at a steady rate. They might not make a lot of money out of it, but there is also no risk of a stock market crash.
It is undeniable to mention the factors that affect the price of gold in this conversation. Therefore, we will not only list the price of gold here, but also provide you with information about what affects it.
Current Gold Price
Below are the current buy and sell prices of Kijang Emas (at the time of writing), as listed by Bank Negara Malaysia.
Source: BNM Kijang Emas
The price of gold in Malaysia has climbed since the start of 2019 as investors turn to havens from looming economic uncertainty. It hit an all-time high in mid-2020 and still trending at the high end of the price range.
Prices declined slightly between 2013 and 2015, but recovered to reach new highs. In fact, it has climbed 58% in the past five years.
Despite this upward trend, there are a few things to consider before investing in gold.
US dollar exchange rate
This is probably the biggest variable in determining fluctuations in the price of gold.
Just remember that global gold trades in US dollars, and an increase in the exchange rate will cause local prices to increase. Conversely, a stronger ringgit will lead to lower gold prices.
It is important to keep an eye on the US dollar exchange rate when trading in gold, as it could affect your buying and selling prices.
Gold prices tend to rise during times of high inflation. Commodities rise during this period as investors use them as a haven to navigate a period of uncertainty. Gold is often used as an alternative form of savings when confidence in the local currency is low.
However, there are times when it goes against the trend. The current gold rally is a good example, according to a recent EdgeMarkets report. In this era of negative bond yields in a low inflation environment, the gold market has recovered.
Likewise, gold-backed exchange-traded funds as well as the futures and options market for trading precious metals like gold, silver and copper will continue to experience abundant activity given the market conditions.
Economic instability tends to push investors to run to secure their money. As mentioned earlier, gold is one of the most popular places to park investments and wait for any sort of economic depression or trade war to end.
However, it also leads to an increase in the selling price of gold due to an increase in demand.
In fact, this increase in demand is not limited to periods of economic downturn. The importance of gold as a raw material in electronics manufacturing also leads to higher demand when the economy is also booming. This is mainly due to the fact that people have higher disposable income and can spend more.
Interest rates set by central banks are often an indicator of the direction of the price of gold. Lower rates tend to mean that the price of gold is set to rise, and higher rates are often followed by lower prices.
To be fair, interest rates are adjusted based on changes in the economy. Lower rates are introduced to stimulate growth if things slow down. At the same time, investors are looking for safer investments during downturns.
Where do you buy gold from?
For the most part, buying gold involves receiving a physical product. Traditionally this would take the form of jewelry, but modern times also include small blocks. In practice, you would keep this gold at home or in a safe until it is time to be liquidated.
In this case, gold can be purchased at any ordinary jewelry store. However, if you are buying for the purpose of trading, this practice is not recommended as the resale value of the jewelry may end up being less than the purchase price; at least in the short term.
A safer alternative would be to invest in gold through a financial institution. Banks often have gold investment accounts that allow individuals to pool their money to buy whole lots of gold. Depending on the type of investment agreement, this may or may not specify a particular lot of gold.
For example, the account will state that you own 5g of gold. The bank could own a stock of gold and just say you own some of it without really saying what bar it is.
Alternatively, your bank may have actually bought the gold bars and stored a safe there for you to point at and say “it’s mine”.
For the most part, there is no practical difference between these two types of gold possession.
Should you invest in gold?
Gold is considered a safe investment because the price doesn’t drop much and has a tendency to rebound eventually. However, it is also a very low return investment as the price does not increase very quickly under normal circumstances.
Basically, you can’t go wrong investing in precious metals, especially if you are really risk averse and want something very stable.
This article was first published in October 2019 and has been updated for freshness, accuracy and completeness.
Our sincere thanks to