Despite CNY, high gold prices cause gold sales to plummet almost 50%

SINGAPORE: Despite the approaching Lunar New Year, which is traditionally seen as an auspicious time to buy gold symbolizing wealth and good luck, local gold shops are witnessing a significant drop in consumer interest, with the high price of gold leading to a nearly 50% decline in the number of buyers, impacting businesses across the city.

In the heart of Beauty World, one gold shop offering a diverse range of Year of the Dragon pendants has experienced a slower-than-usual buildup to the Spring Festival peak season. Business operators, accustomed to a 20 per cent surge in sales during this period in previous years, have responded by increasing discounts and introducing more jewellery styles. Despite these efforts, the buying momentum remains subdued.

The Singapore Gold, Diamond and Jewelers Association has noted a shift in consumer behaviour and predicted a 10 per cent year-on-year decrease in people’s demand for gold jewellery this Spring Festival.

The introduction of a 1% increase in the Goods and Services Tax (GST) from the beginning of the year has also possibly impacted consumer behaviour, with many pre-purchasing during the Christmas period to avoid the higher tax.

Despite the current lacklustre buying momentum, experts highlight that gold remains a hedging tool, and the Association said it anticipates an increased demand for gold as a safe haven investment in the coming year, given the prevailing uncertainties worldwide.

While the uncertain economic outlook is expected to create room for gold prices to rise gradually, some industry insiders cited other reasons they expect sales to recover.

One expert forecasted a positive outlook for gold in the Year of the Dragon and told 8World:

“Many plans to have dragon babies and get married this year, making it a better year for gold jewellery. Additionally, factors such as wars and instability contribute to the sustained demand for gold, with a projected rise of 5% to 10% in the coming year.”

Gold prices, which peaked at about US$2,130 per ounce in December last year, have since experienced a slight decline to approximately US$2,030.

As the Lunar New Year approaches, industry players remain cautiously optimistic, anticipating a gradual increase in buying interest as the festivities draw nearer.