PETALING JAYA: Prices of gold are set to increase by about 10% this year, according to a prominent jewellery tycoon.
Choon Yee Seong, the chairman of popular jewellery franchise Poh Kong, said investors will be flocking to safe haven assets this year in light of the heightened volatility in financial markets.
He said the possibility of the Federal Reserve raising interest rates four times in 2019 will also witness funds flow to the gold market.
“Gold is a safe haven asset and from the past we can clearly see that in times of great volatility in financial markets, the price of gold will increase,” Choon told FMT after attending the company’s annual general meeting yesterday.
Gold is currently priced at US$1,176 (RM4,833) per troy ounce.
Choon expects it to trade between US$1,300 (RM5,343) to US$1,400 (RM5,754) per troy ounce for the rest of the year.
Poh Kong recorded a revenue of over RM1 billion for the financial year ended July 31, 2018, and profit after tax of RM23.4 million.
The highest price for gold was recorded in July 2011 at US$1,911 (RM7,854) per troy ounce, while the lowest price was US$1,167 (RM4,767) per troy ounce in August 2018.
Asked if the return of the sales and services tax in September last year had an impact on sales, Choon says that the tax was passed on to the customers and as such did not affect the company.
Poh Kong currently enjoys margins of 20% on its products.
The company said that its outlook for 2019 is bullish because of the expected rise in gold prices and the preference of investors for choosing gold against other asset classes in times of great volatility.