Gold shops see dip in customers as gold prices surge to record highs

SINGAPORE - Gold shops have seen a drop in customers of at least a 30 per cent recently as gold prices surge to record highs.

A jeweller in Little India said this is the "lowest point" the store is at in 25 years of operations.

Mr Ramanathan Palaniappan, director of APJ Abiraame on Serangoon Road, told The Straits Times: "The number of walk-in customers have dropped a lot, and even if they do come in, they are buying smaller amounts of gold - for example, only 5g instead of 10g.

"The price of gold has soared too much, so customers only buy what they need, for weddings or functions."

Gold prices soared past the key US$2,000 mark for the first time in history on Tuesday (Aug 4) as a rise in Covid-19 cases in the United States dashed hopes of a swift US economic recovery.

The record high gold price has also been driven by concerns over tensions between China and the United States.

Gold is traditionally considered a safe haven asset by investors in times of uncertainty and crisis, such as the ongoing pandemic.

But Mr Palaniappan said: "Investors might be buying more gold, but for regular shoppers, gold is becoming very expensive. For us as business owners, it is very challenging too, because the gold prices shoot up so quickly that it is hard to make business plans. It's hard to tell how much stock to order and keep."

Mr Dheeraj Gottimukkala, business development manager for the Malabar Gold & Diamonds chain in Singapore, said that both of its outlets are getting only about a third of their usual number of customers before Covid-19 hit.

He said: "Already, the economy is not doing well, so people don't come out and shop, and now gold prices are so high. Out of 100 customers, 100 of them will complain that it's too expensive."

On the flip side, individuals who own gold pieces are now able to play the role of the price settler at pawn shops.

Mr Tony Wong, a valuer working for the Soon Yi Pawnshop chain, said that he has seen an uptick in the number of customers popping into the Jurong West outlet with gold ornaments over the past week, but not all of them eventually let go of the items.

He said: "The customers cannot agree on the price. They believe that they can get higher value for their gold at other shops. Now that gold prices are so high, they also know how to calculate."

Mr Paul Ho, director of Heng Seng Pawnshop in Toa Payoh, said that the store has seen more customers selling off their gold pieces in recent weeks. "Customers who own these pieces for a long time are now letting go of their gold for a good profit."