Gold Prices

Gold Prices Continue to Decline Amidst Expectations of Prolonged High Interest Rates

The ongoing decline in gold prices was fueled by investor worries about the likelihood of extended high interest rates.

Spot gold reached a six-month low, falling 0.8% to $1,850.44 per ounce, while U.S. gold futures settled 0.7% lower at $1,866.10. The ongoing decline in gold prices was fueled by investor worries about the likelihood of extended high interest rates, with the U.S. central bank adopting a more hawkish stance on monetary policy.

Monthly and Quarterly Declines

For the month of September, gold was on track to end with a 4.6% decrease, and for the quarter, it faced a 3.6% decline. These declines were largely influenced by the Federal Reserve’s shift towards higher interest rates.

Interest Rates’ Impact on Gold

David Meger, Director of Metals Trading at High Ridge Futures, emphasized the significant influence of interest rates on gold. When interest rates rise, the opportunity cost of holding gold increases because gold doesn’t yield interest and is priced in dollars.

Dollar Index and Treasury Yields Gain

Both the dollar index and 10-year Treasury yields were poised for quarterly gains, further pressuring gold prices.

Brief Uptick on Favorable Inflation Report

Gold briefly saw an uptick, rising by as much as 0.8% in response to a moderately favorable inflation report. In August, the core personal consumption expenditures (PCE) price index increased by 3.9% annually, while the headline index rose by 3.5% year-on-year.

Gold as a Hedge Against Economic Uncertainty

Ole Hansen, Head of Commodity Strategy at Saxo Bank, highlighted gold’s enduring appeal as a hedge against economic uncertainty, especially amidst the challenging outlook for the U.S. economy in the coming months.

Chinese Gold Market and Precious Metals

In the physical gold market, China saw a slight decrease in gold premiums during the week, but they remained elevated due to robust investor demand driven by concerns about a weakening yuan and ongoing economic uncertainties. Among other precious metals, spot silver witnessed a 1.7% decline, platinum recorded a 0.3% decrease, and palladium edged down by 2.1%.

Mustika Ratu

Mustika Ratu (MRAT): Turning Losses into Profits in H1 2023

PT Mustika Ratu Tbk. (MRAT), a leading cosmetics and herbal goods company, turned losses into profits in the first half of 2023.

MRAT Financial Overview

According to financial data, MRAT earned Rp167.80 billion in H1 2023. This is a slight gain from Rp166.89 billion last year, but the company managed to negotiate a tough economy.

Cost of goods sold rose significantly despite a 0.54 percent sales gain. The cost was Rp84.42 billion in H1 2023, up 9.98% from Rp76.77 billion last year.

Selling expenses fell to Rp51.42 billion from Rp67.30 billion and general administration expenses to Rp24.92 billion from Rp26.75 billion in H1 2023.

Diversified Revenue Streams MRAT reported Rp550.03 million in other income, unlike the prior year when it had Rp117.15 million in costs. Financial income rose from Rp13 million to Rp3.09 billion.

MRAT’s net profit attributable to the parent entity’s owner was Rp37.28 million, a substantial improvement from the prior net loss of Rp9.9 billion.

Liabilities and Financial Position

The company has Rp229.47 billion in liabilities, with Rp45.68 billion in long-term and Rp183.78 billion in short-term. MRAT equity is Rp413.42 billion, increasing its assets to Rp642.90 billion.

Future Growth Optimism from Management

MRAT’s management recently stated that current consumer trends greatly support the company’s prospects for large sales growth in 2023.

The management stressed that beauty and health potential remain strong, especially as customers engage in more outdoor activities post-pandemic.

“As a result, there will be an increasing demand for beauty and health products, which will grow even stronger in 2023,” management said Thursday (28/9/2023).

This situation matches MRAT business lines relating to post-pandemic tourism industry development, according to management. This recovery should benefit Mustika Ratu’s Spa & Wellness and creative businesses.

MRAT Strategies for the Future

Financial achievements and a positive market outlook set MRAT for strategic growth. The corporation chose IPOs over bond issuances due to market conditions. MRAT expects corporate bond issuances to rise in 2024 and 2025 if The Fed and Bank Indonesia increase interest rates.

Challenges and Market Dynamics

Cost control, revenue diversification, and strategic market positioning are delicately balanced in MRAT’s financial success. Adapting to changing consumer behaviors, economic situations, and industry developments will be crucial to the company’s growth.

MRAT management is closely monitoring consumer preferences and the economy while the market awaits new leadership policies and election cycles. The company’s H1 2023 financial turnaround shows its resilience and strategic adaptability in a changing business climate.