KUALA LUMPUR (March 23) — Gold prices are on fire! The precious metal continues to defy expectations, repeatedly smashing record highs as investors seek refuge from global economic turbulence. As of March 20, 2025, gold has breached the US$3,000 per troy ounce mark, standing at US$3,036.74, according to data from goldprice.org. This unprecedented surge raises a critical question: how high can it go?
A Brief Recap of Gold’s Ascent
To understand the current landscape, it’s essential to recap the recent history of gold prices. On October 30, 2024, gold surged to an all-time high of US$2,787.61 (RM12,324) per troy ounce before settling at US$2,693.23 in January 2025. The rapid ascent has been largely attributed to growing uncertainty in the global economy, a sentiment echoed by Bank Muamalat Malaysia Bhd chief economist Dr. Mohd Afzanizam Abdul Rashid.
“Whenever fear grips the global economy, gold shines the brightest,” he stated. Gold is not only viewed as a store of wealth but also as a hedge against inflation, currency devaluation, and geopolitical instability. This perspective is supported by the fact that central banks worldwide have been aggressively stockpiling gold, increasing their share of total demand from a mere 1.8% in 2010 to a staggering 21.0% in 2024.
The Role of Economic Uncertainty
Dr. Mohd Afzanizam pointed out that the Global Economic Policy Uncertainty Index soared to 339.36 points in November 2024, reflecting growing concerns over U.S. Federal Reserve policies, trade tensions, and political instability during Donald Trump’s second term. Historically, spikes in economic uncertainty have led to corresponding increases in gold prices, reinforcing its status as a safe haven asset.
Other Commodities: Rising but Lagging Behind Gold
While gold has captured the spotlight, other commodities have also experienced significant price movements, albeit not to the same extent. For instance, cocoa prices surged to a 50-year high in December 2024, reaching US$12,906 per tonne due to adverse weather conditions and underinvestment in major cocoa-producing regions. As of March 20, 2025, cocoa prices stood at US$7,746.3 per tonne, indicating a slight decrease but remaining elevated compared to historical levels.
Oil prices have also been volatile, with Brent crude edging up to US$71.78 per barrel on March 20, 2025, driven by instability in the Middle East and China’s stimulus measures. However, these fluctuations have not mirrored the unprecedented surge observed in gold. Coffee prices have shown significant volatility as well, with Arabica beans reaching nearly US$3.50 per pound in December 2024, marking an 83% increase in 2024.
In the palm oil sector, crucial for Malaysia, prices have fluctuated significantly. After reaching an all-time high of RM7,268 per tonne in March 2022, palm oil prices have decreased by RM246 per tonne, or 5.54%, since the beginning of 2025, largely due to adjustments in global supply and demand.
The Impact of Rising Gold Prices on Malaysians
The gold rush has created both winners and losers in Malaysia. On one hand, gold jewellery remains a cultural staple, particularly among women and those leveraging Ar-Rahnu (Islamic pawn broking). The rising popularity of gold-based investments has driven more Malaysians to diversify their portfolios. However, the skyrocketing prices have made gold less accessible for many consumers, potentially leading to a shift toward alternative investments or lower-cost jewellery options.
Retailers are caught in a high-stakes game; while some thrive, others struggle to keep up with fluctuating prices. For instance, Kuala Pilah, Negeri Sembilan, has emerged as a gold-shopping hotspot, attracting buyers with competitive pricing. For Malaysians sitting on gold investments, the dilemma remains: cash out now or hold for bigger gains? Dr. Mohd Afzanizam advises that the decision depends on individual financial goals.
The Jewellery Industry’s Response
The rising gold prices have had a mixed impact on Malaysia’s jewellery industry. Datuk Wira Louis Ng, president of the Malaysia Gold Association (MGA), noted that consumers have become more cautious when purchasing gold jewellery, especially during peak seasons like weddings. However, the export sector has benefitted significantly, with gold jewellery exports reaching an estimated RM7.7 billion in 2024, driven by strong demand from key markets such as Singapore, the UAE, Hong Kong, Japan, and Australia.
Jewellers are adapting by offering lightweight designs that require less gold, making jewellery more affordable. Additionally, many are incorporating alternative materials, such as lab-grown diamonds, to provide cost-effective yet high-quality options. The trend towards minimalist designs and the introduction of smaller investment gold bars cater to first-time investors and those looking for lower-cost entry points.
Outlook: Will Gold Hit US$5,000?
Some speculators predict that gold could soar to US$5,000 per troy ounce by year-end, but Dr. Mohd Afzanizam remains cautious, suggesting that such a value may take three to five years to materialize. A more realistic target, he believes, would be between US$3,000 and US$3,500 per troy ounce in the coming years.
As the gold market continues to evolve, Malaysia’s jewellery industry is focusing on innovation and diversification. Industry players are expanding their offerings and exploring new markets to remain competitive in an environment where gold prices continue to rise.
Conclusion
In summary, while commodities like cocoa, oil, coffee, and palm oil have experienced significant price movements, none have matched the unprecedented surge of gold. As gold prices continue their meteoric rise, the implications for investors, consumers, and the jewellery industry are profound. The future remains uncertain, but one thing is clear: gold will continue to shine brightly in the face of economic turbulence.