KUALA LUMPUR: As gold prices soar to new highs in recent months, there is a significant uptick in Malaysians pawning their gold possessions for quick cash.
Pawn shops operators in the Klang Valley confirmed more people are pawning their gold, especially jewellery, as many are weighed down by the rising cost of living while others find themselves in financial straits.
For people in such predicament, gold surging to new highs is God-sent as it provides them the opportunity to pawn or sell their gold jewellery at much higher prices.
Pajak Gadai United Tapah Resources representative R Saranya said since gold prices started spiking from last October, there has been a 30% increase in the number of people pawning their jewellery at its Kuala Lumpur outlet.
“People prefer to pawn their jewels as we usually offer cash whereas jewellers only offer trade-ins or items in exchange,” she told FMT Business.
She said with the hike in gold prices, people who pawn their gold now seldom redeem the items. “We finally have to auction the items,” she added.
This trend was corroborated by another pawn shop in Brickfields, Kuala Lumpur.
“Before the surge in gold prices, individuals who pawned their jewellery usually redeemed it within three to five months. However, the trend has shifted, with people now taking longer than six months to redeem or sometimes not redeeming it at all,” the shop’s operations assistant told FMT Business.
She noted an increase in the number people wanting to pawn their jewellery as they needed emergency cash or their salaries had been credited late.
The price of gold has been on an upward trend since the Hamas-Israel conflict sparked off on Oct 7 last year. Spot gold hit a record high of US$2,353 (RM11,188) yesterday, a US$520 or 28% jump from US$1,833 on Oct 6, 2023.
Strong central bank buying, safe-haven inflows amid elevated geopolitical risks, and demand from momentum-following funds have fuelled gold’s 12% gain so far this year, according to a Reuters report yesterday.
People still buying gold
Despite the sky-high gold prices, Malaysians continue to buy the precious metal. Heritage Jewellers Sdn Bhd salesman N Murugan said people continue to purchase 916 gold jewellery, with no significant increase or decrease in the number of buyers.
“People usually purchase it for weddings, sometimes as much as three to five pounds of gold. The price for 916 gold could even surge up to RM500 per gram in the days to come,” he told FMT Business.
Jewellery in Malaysia is typically made from 916 gold, comprising 91.6% pure gold and 8.4% other metals. 916 gold traded at RM373 per gram yesterday afternoon.
Meanwhile, home-baker Janice Sillas, 39, lamented over the hike in gold prices as she wanted to purchase gold for her upcoming wedding.
“I have no choice but to buy gold at the current high price. If it keeps increasing, then we can’t purchase gold jewellery in the days to come.
“All I hope is that the gold price will drop to a reasonable level,” she added.
Malaysian Gold Association president Louis Ng said Malaysians are still buying gold as an investment, considering it a secure option amid economic uncertainty.
“Despite some fluctuations, gold sales in Malaysia remain robust where people are still buying it for investment and personal reasons, keeping demand fairly steady,” he told FMT Business.
He believes that factors such as inflation and currency fluctuations will continue to impact gold prices. - FMT
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