Gold industry faces quiet sales amid pricing surge

Local jewelry shop owners have revealed a cautious sentiment among consumers in Macau’s gold industry, where prices have surged by 42% in 2024.

As the cost of gold remains high, shops like Sheong Hei Jewellery and Prince Gold indicate to the Times that many residents and tourists are prioritizing essential purchases over luxury items.

Both highlighted a trend of increased gold selling rather than buying, suggesting that the current pricing dynamics are reshaping consumer behavior and could significantly impact sales moving forward.

The surge in gold prices has prompted many residents and visitors to sell their gold rather than buy, according to Lei Koi Ian, president of the Macau Goldsmiths Guild.

He recently emphasized to the press that Macau’s role in the downstream gold industry is primarily sales-focused, lacking the manufacturing capabilities and gold exchanges that could facilitate a recycling mechanism.

As a result, the region may face competitive pricing pressures from neighboring markets.
Lei noted that the rising gold prices have led to an increase in gold sales by both residents and tourists, suggesting a trend that may significantly alter the local market dynamics.

Interviews with local jewelry shop workers reveal a cautious consumer sentiment regarding gold purchases.
Francisco Wong of Sheong Hei Jewellery commented on the unpredictability of gold prices, attributing fluctuations to geopolitical conditions and demand.

“No one can predict this kind of matter, but the trend will rise,” Wong explained to the Times.
He noted that consumers are currently prioritizing essential purchases over luxury items like gold jewelry.

“With the employment and income situation not being ideal, people are only purchasing gold when absolutely necessary,” Wong said, underscoring a shift in consumer behavior toward more practical spending.

He emphasized that buying gold is typically associated with significant life events rather than everyday purchases.

Leong Chi Pui from Prince Gold echoed these sentiments, expressing a belief that gold prices will continue to rise. “Yes, it will rise,” he confirmed when asked about future price trends. However, he also acknowledged that consumers might be hesitant to buy unless they have an immediate need.
“If someone needs it urgently, they will buy it. However, if they are just speculating, they probably won’t purchase it for living expenses.”

Economic Implications

The rise in gold prices is not merely an issue for jewelers; it also reflects broader economic conditions.

With many consumers tightening their belts and focusing on essential goods, the potential for a sustained downturn in gold jewelry sales could have ripple effects throughout the local economy.
Wong highlighted the influence of the U.S. dollar on gold prices, suggesting that a strong dollar could keep prices high, while a depreciation might lead to an increase in gold purchases.

“As long as the dollar remains strong, gold prices are unlikely to rise,” he stated.
He expressed hope for government intervention to support consumers during this volatile period, suggesting that financial assistance could alleviate some of the pressures faced by both buyers and sellers in the gold market.

For the Macau Goldsmiths Guild, the outlook for the gold industry in Macau remains uncertain. Lei hopes that the opening of the Zhuhai-Macau business industrial chain cooperation will provide new opportunities for the sector, allowing for improvements in design and technology. This development could lead to the introduction of “light metal” products, potentially lowering prices and attracting more consumers.

Gold Prices and  Consumer Behavior

In October 2024, gold prices in Macau hit a record high, surpassing MOP30,000 per tael, driven by global bullion trends and geopolitical factors.

Lei noted that while some consumers adapted to the new prices, many working families found gold increasingly unaffordable.

This shift led to a preference for lighter jewelry designs and a trend toward selling existing gold investments.

Despite the high prices, the association assured that buying and selling activities persisted, although the volume of sales had increased compared to lower price periods.

Amid these challenges, the Macau Goldsmiths Guild is taking proactive steps to enhance industry standards and consumer confidence.

This year, the guild organized a gold purity certification program, which saw participation from 93 member companies. All participants met the established purity standards following third-party testing.

Additionally, the guild has emphasized the importance of education in the sector.
Certificates were awarded to eight students who completed a course in precious metal jewelry and gemstone inspection, highlighting the need for skilled professionals in a fluctuating market.

Lei noted that the high cost of gold could lead to a decline in jewelry purchases by both locals and tourists. “In the next six months, we believe that there will be no downward adjustment, but the upward pressure will still exist, which will make our industry relatively difficult. This may affect our sales,” he stated. Victoria Chan