Gold prices expected to remain elevated amid new highs, while sales in Macau see decline

Gold prices have consistently reached new highs this year, with reports indicating that this upward trend represents the best annual performance since 1979, and Lee Koi Ian, lawmaker-cum-president of the Macao Goldsmith’s Guild, expects that gold prices will remain elevated in 2026 amid a favorable interest rate reduction environment.

Hong Kong media reported that State Street Investment Management released its “Gold 2026 Outlook,” which highlighted that this year’s gold price rally marks the best annual performance since 1979. The report anticipates a moderation in 2026, predicting that gold prices may fluctuate between USD4,000 and USD4,500 per ounce. Additionally, it suggests that strategic asset reallocations and geopolitical factors could drive gold prices to test the USD5,000 per ounce level.

In Macau, industry players report that while elevated gold prices have increased investment demand, consumer spending on gold jewelry has become more measured. Essential purchases, such as wedding gold, are shifting to alternative products due to high prices. As a result, industry sales remain stable in monetary terms; however, tourist areas show relative stability by weight, while local retail outlets have experienced approximately a 10% decline in sales.

Lee noted that some gold dealers are now buying more gold than they sell, placing financial pressure on small and micro enterprises. Given Macau’s lack of a complete gold recycling industry chain, requiring most transactions to be processed in Hong Kong, small- and medium-sized gold dealers face price differentials and volatility risks due to their limited scale. They are urging the government to establish a gold testing and recycling platform and improve long-term mechanisms to protect both their rights and consumer interests.

On the mainland front, the central bank has been steadily increasing its gold holdings in small increments amid the sustained surge in international gold prices, which have consistently reached record highs. Mainland Chinese media reported an academic stating that as the Federal Reserve’s interest rate cuts gain momentum and geopolitical risks persist worldwide, international gold prices have maintained their rapid upward trajectory. A significant factor in this trend is the emerging political and economic landscape following the inauguration of the new US administration, suggesting that international gold prices may be more prone to rise than fall for an extended period.

As noted in the report, as of the end of last month, gold reserves accounted for 8.0% of China’s official international reserves, which primarily consist of foreign exchange and gold—significantly below the global average of around 15%. To optimize the structure of international reserves, it was recommended continuing to increase gold reserves while moderately reducing holdings of US Treasury bonds.

Mainland China implemented new gold taxation policies early last month, eliminating the 13% full VAT deduction for retailers purchasing gold from the Shanghai Gold Exchange and instead adopting a tax-by-use approach. In response, Macau’s gold industry holds a cautiously optimistic outlook for next year’s market.