GOLD HOLDS VALUE, SERVES AS HOUSEHOLD ECONOMIC SHIELD

By Nurunnasihah Ahmad Rashid

KUALA LUMPUR, Dec 25 (Bernama) -- For most Malaysian households, surging global gold prices are more than a tale of market speculation. They act as a financial safeguard, as the value of jewellery and accumulated gold holdings rises, easing household pressures and strengthening family resilience amid the rising cost of living.

Gold ownership in Malaysia is not a new phenomenon. It is deeply embedded in household savings and financial management traditions, particularly through inherited jewellery and modest savings set aside for emergencies.

Rising gold prices do not merely reflect global market sentiment; they also translate into increased household asset values—quiet wealth often overlooked in mainstream economic discussions.

When gold prices have climbed in recent years, especially in 2025, the effects extend beyond investors or financial institutions. They bolster the finances of ordinary households without requiring additional action or exposure to high market risk.

At the time of writing, global gold is priced at US$4,491.30 per ounce (US$1=RM4.04).

A Financial Buffer Against Economic Shocks

Professor of Economics Dr Yeah Kim Leng of Sunway University said higher gold prices have tangible effects on household finances, particularly for families holding gold as a long-term asset rather than for speculation.

“Rising gold values indirectly strengthen household balance sheets, helping families absorb cost-of-living pressures without taking on additional debt or sacrificing essential spending,” he told Bernama.

In other words, gold functions as a financial buffer, enhancing households’ capacity to withstand economic shocks, whether through rising prices, income disruptions, or unexpected expenses. Its role becomes increasingly important in an uncertain global economy, where inflationary pressures and external risks continue to shadow growth prospects.

Low-Risk Savings for Retirement

Rawahah Mohd Fadil, 36, a private sector employee, began saving gold gradually in 2018 on her late mother’s advice, before intensifying her holdings during the COVID-19 pandemic.

“I started small because gold is low-risk and can be purchased gradually, unlike assets such as property. I became serious in 2020 when the pandemic hit,” she said.

She converted some funds from moratoriums and Employees Provident Fund withdrawals into long-term gold savings.

Rawahah has not sold any of her holdings except for gifting a few coins to family members. Rising gold values have provided her with financial peace of mind.

“Five dinars I bought in June 2022 cost RM6,009. By December 2025, they were worth RM13,489—a rise of more than 100 per cent. Money loses value due to inflation, but gold preserves and grows in value. With gold savings, my finances feel more secure because part of my wealth is held in a stable asset,” she said.

Gold also provides emergency liquidity, as it can be pledged through Ar-Rahnu—a Shariah-compliant pawnbroking scheme where individuals use gold or jewellery as collateral for short-term, interest-free financing—or sold outright, encouraging disciplined and consistent saving.

Broader Economic Implications

Financially resilient households tend to maintain spending patterns despite external pressures, supporting domestic demand and underpinning economic growth, particularly when external sectors face global uncertainty.

Gold acts as a quiet stabiliser. While its impact is indirect, rising household asset values help maintain consumer confidence, reduce the need for extreme austerity, and mitigate negative effects of economic shocks on daily expenditure.

Its role is also evident in Malaysia’s Islamic financial ecosystem, particularly through Ar-Rahnu schemes. Higher gold prices increase collateral value, allowing households and micro-entrepreneurs to access better financing without raising indebtedness. This supports short-term liquidity and reduces reliance on informal credit.

From a public policy perspective, stronger household assets enable the government to direct resources to those most in need, while supporting long-term development. Rising gold prices also benefit the domestic gold industry, including jewellery manufacturing, storage services, and gold-based financial products, creating economic value and employment.

A Long-Term Protective Asset

Economists expect gold prices to continue fluctuating with global developments. Yet gold’s role in Malaysian households remains relevant. As a long-term asset, it preserves value, encourages saving discipline, and strengthens financial resilience across generations.

In an increasingly challenging economic landscape, gold in Malaysian households underscores that economic strength depends not only on growth figures or fiscal policy, but also on prudent household savings and asset management.

-- BERNAMA