Why Singaporeans are turning to gold: An analysis of the precious metal.

Gold isn't just a metal; it's a symbol of prosperity, tradition, and financial prudence deeply embedded in Singapore's cultural fabric. From the gleaming gold chains adorning necklaces to the shimmering gold bars tucked away in investment portfolios, gold holds a special place in the hearts of Singaporeans.

In the Lion City, a melting pot of various Asian cultures, gold is often a cherished gift that conveys good fortune and well-wishes. This practice is deeply rooted in the traditions of its diverse communities.

• Chinese Heritage: The custom of gifting Si Dian Jin (four touches of gold) during a Chinese wedding is a timeless tradition. This set of gold jewellery—typically a necklace, bracelet, earrings, and ring—is presented by the groom's family to the bride. It symbolises the family's warm welcome and their wish for a prosperous future. Gold is also a common gift during the Chinese New Year, representing wealth, longevity, and happiness.
• Malay Traditions: Gold jewellery plays a pivotal role in Malay festivities. Brides are adorned with exquisite gold pieces that reflect their beauty and elegance. The kerongsang, a set of three brooches made of gold or silver, is a traditional accessory for the kebaya, the traditional Malay blouse.
• Indian Customs: In Indian culture, gold is an essential part of a bride's ensemble, often gifted by her parents or in-laws. The maang tikka, an auspicious headpiece worn at the centre of the forehead, is also a traditional piece of gold jewellery that bestows the bride with wisdom. The mangalsutra, a sacred necklace of black and gold beads, is a crucial emblem of marital status.

• Surge in Gold investment: Beyond its cultural significance, gold has become an attractive investment avenue for Singaporeans, especially in a world of increasing economic uncertainty. 2025 has seen a remarkable surge in gold prices, with spot gold reaching record highs.
  According to the World Gold Council's Q2 2025 report, Singapore investors' appetite for gold remained strong. Purchases of gold bars and coins surged by 37% to 2.2 tonnes compared to the same period in the previous year. This reflects a growing trend among retail investors to include gold as a safe-haven asset in their portfolios.
  
• Decline in jewellery demand: In contrast, the demand for gold jewellery in Singapore saw an 8% decline to 1.5 tonnes in Q2 2025. This is largely because record-high gold prices have curbed consumer spending on jewellery. This phenomenon highlights a shift in perception, with more Singaporeans viewing gold as a financial instrument rather than just a decorative item.
  
• Accessibility of investments: The allure of gold is further amplified by the ease of access to trading platforms. Online trading platforms like OANDA offer gold trading through Contracts for Difference (CFDs), allowing traders to trade the price movements of gold against various currencies, including the Singapore Dollar (XAU/SGD), without owning the physical metal. This makes it a liquid and accessible option for those who want to gain exposure to gold's price fluctuations.
  https://www.oanda.com/sg-en/trading/instruments/xau-sgd/.
  However, it is also crucial to note that CFD trading is a form of leveraged trading and there is a high risk of losing money rapidly due to leverage.

2025 has witnessed a remarkable surge in gold prices, with spot gold reaching record highs. This surge is driven by a confluence of global factors, including geopolitical tensions, market volatility, and central bank policies.

Central banks worldwide are increasing their gold reserves to diversify their assets and hedge against geopolitical and market-driven risks. Gold, when stored domestically, is immune to seizure, providing a level of comfort during times of political instability.

The outlook for central bank gold purchases remains strong into 2025, as a recent World Gold Council survey indicated that a record 95% of respondents believe that official gold reserves will continue to increase.

This is further supported by the fact that over 80% of global monetary authorities are willing to increase their gold holdings. In the first quarter of 2025, global central banks purchased 244 tonnes of gold, with another 166 tonnes added to reserves in the second quarter. This consistent buying trend underscores gold's enduring appeal as a strategic reserve asset.

From an investment perspective, gold is a key portfolio diversifier. This was perfectly illustrated in 2022 when global equity markets lost -19.46% and global bonds lost -16%, while gold rose by 3%, according to JP Morgan’s latest outlook on the precious metal.

The diversification benefits are amplified when viewed through the lens of modern portfolio theory, which holds that diversifying across lowly correlated assets can improve overall risk-adjusted returns. Historically, gold has exhibited a low, or sometimes negative, correlation to traditional asset classes such as equities and bonds, making it a valuable "portfolio ballast" that helps to enhance the risk-return profile.

Gold's enduring appeal in Singapore is a testament to its multifaceted role in the nation's cultural traditions and financial strategies. While its traditional use as a symbol of cultural identity remains strong, gold has concurrently emerged as a crucial financial asset in an uncertain world. Whether as a cherished gift during festive seasons or a prudent investment choice to diversify a portfolio, gold continues to shine brightly in Singapore's landscape.