Poh Kong director Ermin Siow Der Ming expect the gold price at least stay range-bound at the US$2,005 [RM9,484] to US$2,050 level this year if is not going up further.

KUALA LUMPUR (Jan 30): Jewellery retailer Poh Kong Holdings Bhd is bullish on gold prices based on expectations that the US Federal Reserve may soon signal an end to interest rate hikes given that it has kept the benchmark rate within a range of 5.25% to 5.5% in December.

“The anticipation of the US Federal Reserve potentially halting interest rate hikes is indeed highly favourable for gold prices,” said Poh Kong’s director Ermin Siow Der Ming.

He observed that the group’s gross profit margin, which stood at about 20% for the financial year ended July 31, 2023 (FY2023), may also be boosted.

“But all these factors have already been priced into the market. Consequently, despite reaching an all-time high in December, gold prices have experienced a slight decline in January,” he told reporters after the group’s 21st annual general meeting on Tuesday.

“We expect if the gold price is not going up further, it will at least stay range-bound at the US$2,005 [RM9,484] to US$2,050 level this year," Siow said, but pointed out a sudden increase in gold prices may affect retail sentiments as consumers "may hold back.”

Gold, which hit an all-time high of US$2,077.49 on Dec 27, 2023, was trading at US$2,038 at the time of writing on Tuesday, Bloomberg data showed.

In addition to the potential halt in US interest rate hikes, Siow anticipates that other factors, including the ongoing Russia-Ukraine war, the current situation in the Middle East, and the deliberate efforts by central banks to augment their gold reserves, could continue to bolster the optimistic outlook for gold prices.

For the first quarter ended Oct 31, 2023 (1QFY2024), Poh Kong’s net profit grew 21.29% to RM19 million from RM15.67 million a year earlier largely driven by an uptrend in gold prices.

Quarterly revenue, meanwhile, dipped 3.88% to RM355.98 million from RM370.36 million on lower demand for gold jewelry products amid weaker market sentiment.

When questioned about the group's discussions with the government concerning the high-value goods tax, Siow said, "Even after numerous dialogue sessions with the government, no final decisions have been reached. We are still awaiting the government's final decision."

The tax at a rate of 5% to 10% (previously known as the luxury tax) will come into effect in May. It is understood that the government is currently finalising the policy and draft legislation for the tax on high-value goods.