Gold stocks sparkle amidst banking turmoil

Gold stocks sparkle amidst banking turmoil
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PETALING JAYA: The stocks of listed gold jewellers and miners shined brightly today, with the counters rising substantially.
The “gold rush” appears to be the result of a flight of funds searching for safe havens amidst fears over a global banking crisis.Poh Kong Holdings Bhd was up 12.07% or 11 sen today, reaching 98 sen at the close of trade.Similarly, Tomei Consolidated Bhd was up 10.71% or 12 sen  reaching RM1.24. Niche Capital Emas Holdings Bhd skyrocketed 29.63% or 4 sen to 18 sen.

Not only that, Sabah-based gold mining company Bahvest Resources Bhd was up 8.77% or 2.5 sen, reaching 31 sen.
Poh Kong, Tomei and Niche are Malaysia-based investment holding companies principally engaged in the distribution and supply of jewellery, precious stones, semi-precious stones, and gold ornaments.
While gold-related counters were on the rise , prominent banking stocks fell slightly today. Maybank’s share price slipped 0.48% today or 4 sen, Ambank fell 1.34% or 5 sen, and CIMB Bank dipped 1.34% or 7 sen.
Gold passes US$2,000 an ounce
In a note earlier today, Rakuten Trade noted that gold prices had surged to almost US$1,990 (RM8,927) per ounce.It then rose above US$2,000 (RM8,972) an ounce for the first time in more than a year after the banking crises in the US and Europe triggered a return to safe haven buying later in the day.
The collapse of Silicon Valley Bank (SVB), as well as the turmoil faced by Credit Suisse in the last week appeared to have rattled markets.
“Gold is likely to shine through the chaos as investors adopt a guarded stance,” said Lukman Otunuga, senior research analyst at FXTM, a US stock trading company.
As of last Friday, spot gold climbed 3.1% to US$1,977.89 (RM8871.83) per ounce, its highest level since April 2022.
Bullion surged 6.5% last week in its biggest advance since the early days of the pandemic in March 2020, according to a Bloomberg report.
The sudden affinity for gold is only natural as it is viewed as the “safest asset class”, Rakuten Trade head of research Kenny Yee told FMT Business.Knee-jerk response
Yee does not believe the uptick of interest in gold is likely to endure in the long-term, noting that it was likely part of the knee-jerk response to bank failures in the U.S.
“Tomei and Poh Kong are not (involved in selling or extracting gold in its) raw form, unlike Bahvest. So, Poh Kong and Tomei will benefit a bit if this (negative sentiment) prolongs, but not in the long-term,” Yee added.
Gold mining companies like Bahvest are expected to be better positioned to benefit from the uptick in gold compared to jewellers.
“Gold-related counters may gain momentum as turmoil in the US banking sector has brought interest to gold, spurring the commodity’s price,” said Malacca Securities.
Whether gold can hold onto these gains will really depend on the US dollar, Commonwealth Bank of Australia analyst Vivek Dhar said in a note.“We consider the US dollar a stronger safe-haven asset than gold. That means that if risk events are large enough, we will typically see markets shift from gold to the US dollar,” he added.
The renewed interest in gold comes after a tumultuous week for banking stocks, predominantly in the US as well as in Malaysia.
Last week, San Francisco-based SVB, which had US$212 billion in assets, collapsed.
Not long after, New-York based Signature Bank, followed suit, causing fears of a second global financial crisis.