SGX-listed gold-linked counters lose steam on yellow metal’s decade-worst retreat

[SINGAPORE] After a sharp correction that saw gold shed as much as 10 per cent on Monday (Feb 2), shares of pawnbrokers and other gold players on the Singapore Exchange (SGX) were dragged lower. The retreat follows a volatile weekend where spot gold dipped below the US$5,000 an ounce mark and logged its decade-worst reversal. Christopher Forbes, head of Asia and the Middle East at CMC Markets, described the move as a “classic air-pocket after an extraordinary run”.He remarked that profit-taking, a firmer US dollar and fresh geopolitical headlines from Washington have “knocked froth off a crowded trade”.The trigger for last Friday’s sell-off was the headlines surrounding US Federal Reserve chair nominee Kevin Warsh. Warsh’s potential impact on the Fed’s leadership coincided with a firmer US dollar which can amplify pressure on metals in the short run, said Charu Chanana, chief investment strategist at Saxo Markets, in a note on Monday. Uday Vikram, co-chief investment officer at Klay Group, remarked that markets had priced in a narrative of a more politically pressured and dovish Fed, reinforcing themes of dollar debasement and strong demand for hard assets as alternatives to fiat. “This sell-off is a gut check,” said Uday. He noted that investors are now reassessing whether the market is on the cusp of a turn towards harder money – a Fed leadership that prioritises credibility, discipline and independence more than markets had assumed.Chanana added that headlines over the Fed’s looming leadership transition were compounded by CME Group raising margin requirements, a move that forced leveraged investors to liquidate positions rapidly.The price decline was further accelerated by reports that China halted trading in several commodity-linked funds – notably silver. This increased uncertainty and forced selling dynamics for some holders, she noted. Local counters lose steam Gold producer CNMC Goldmine bore the greatest hit from the sell-off, declining 12.6 per cent as at 2.28 pm on Monday. Despite the hit, the counter remained up more than 337 per cent year on year.Bullion retailers and pawnbrokers whose inventory values are directly tied to spot prices also retreated. ValueMax dropped 10.3 per cent as at 2.28 pm, while maintaining gains of more than 11 per cent year to date. It climbed around 130 per cent in the past year.Meanwhile, financial and luxury retailer MoneyMax Financial Services was down 2.8 per cent, though its shares remain at nearly double its value from a year earlier. The pawnbroker said in a bourse filing on Monday that it anticipates a “significant improvement” in net profit for both the second half and full year of 2025 compared with the same periods in 2024.This is primarily driven by two key areas: the company’s pawnbroking division, which benefited from higher interest income, and its gold and luxury retail segment, which got a boost from elevated bullion prices and a surge in sales volume, said MoneyMax.In January, MoneyMax received in-principle approval from SGX to move from the Catalist to the mainboard. This transition reflects the group’s rapid expansion and positions the company among larger peers to better unlock shareholder value. Aspial Lifestyle , owner of jewellery chains Lee Hwa and Goldheart and pawnbroker Maxi-Cash, shed 5.4 per cent as at 2.28 pm. It has advanced more than 23 per cent year since the start of the year.Meanwhile, the broader market reflected caution as the SPDR Gold Shares exchange-traded fund retreated 11.9 per cent as at 2.28 pm, having risen 48.5 per cent over the past year. Volatility aheadIn the near term, CMC Markets’ Forbes believes that gold is more likely to trade “violently” within a high plateau than collapse, with a key range of US$4,800 to US$5,000 an ounce. He added that in the longer term, the forces behind this rally – negative real rates, loose fiscal policy and geopolitical risk – still support structurally higher prices. However, he noted that gold’s path will be choppier.Similarly, Klay Group’s Uday said: “In the near term, we could see continued downward pressure as positions unwind due to profit-taking, leverage and weaker hands being forced out… “But over the longer term, the structural drivers behind gold and select commodities remain intact, offering long-term investors a clear opportunity to re-engage.”