Gold Prices Swing Amid Interest Rate Hikes and Oil Price Volatility

Malaysians who own gold should focus on their financial goals and market movements rather than reacting to weekly price swings, says Mohd Razalie Abdul Rasul, managing director of Abdul Razak Gold House Kuala Lumpur.

A clear view of one's financial objectives will help consumers decide whether to buy, hold or sell as the market fluctuates, he added. The current decline in gold prices reflects movements in interest rates and oil prices, according to Mohd Razalie.

The main pressure on gold comes from rising interest rates, fueled by inflation worries and strengthened expectations that rates will stay higher for longer, while a firm US dollar has also weighed on gold. Gold pays no interest, so when yields rise, cash and bonds become more attractive by comparison, said Mohd Razalie.

Despite the decline, central banks bought 289 tonnes in the second quarter, a record for that quarter, and the World Gold Council reported that bar and coin investment was broadly steady from a year earlier at 307 tonnes. However, gold exchange-traded funds (ETFs) saw net selling of 45 tonnes.

Mohd Razalie cautioned that falling prices can tempt people to act quickly, in either direction, and reminded consumers that short-term moves are volatile and can reverse quickly. He also noted that the ringgit, product type, and seller spreads all change what a Malaysian actually pays or receives.