Local gold prices calm amid storm
Written by Writer on Tuesday, October 28th, 2008
COMMODITIES
Local gold prices calm amid storm
CHAROEN KITTIKANYA
Local gold prices remained unchanged yesterday despite gains on Friday in the New York market.
Prices of gold bars were quoted at 12,550 baht per one-baht weight (15.16 grammes), unchanged from Friday, while gold ornaments were down 50 baht to 12,950 baht.
Jitti Tangsithpakdi, the president of the Gold Traders Association, said price swings during the day made it difficult to report daily trading prices.
More importantly, a new gold supply has yet to return to the Thai market.
“Trading in foreign markets moved up and down rapidly during the day by $10 per ounce. We thus opted to make no price adjustments during Monday’s trading,” he said.
Gold fell nearly 3% in early trading in London yesterday to a session low of $712 an ounce, as the dollar strengthened to two-year highs against the euro and oil fell more than $2 a barrel.
According to Mr Jitti, the local market would remain jittery for some time given the short supply of gold bars.
Panapong Suttheewong, the manager of the association, said gold outlets generally kept relatively low gold bar stocks, as stocking requires a lot of cash, and margins are low. Most outlets sell bars only on purchase orders, he said.
A difficulty facing the market, he said, was that local traders who want to buy gold need to settle full payment immediately once a purchase deal is reached, while delivery takes seven to 15 days.
Variable world supplies and pronounced price swings prompted local gold outlets to suspend trading of gold bars on Saturdays and Sundays until early next year, effective last weekend.
Gold had climbed in New York on Friday, erasing earlier losses, as equities tumbled worldwide, boosting demand for the precious metal as a safe heaven. The metal declined 7.3% last week and is heading for a 17% drop this month, the worst since March 1980.
But on a weekly basis, gold futures fell below $700 mark for the first time in 13 months, as fund liquidations and the US dollar’s rise took a toll on sentiment.
Investors had been selling off the precious metal favour of equities and in response to the sharp fall in oil prices. Gold is often seen as an investment safe haven whose prices tend to rise when the economy falls into trouble, but its recent slumps have challenged conventional wisdom.
The US dollar continued its rally last week, putting more pressure on gold. A rising dollar tends to reduce gold’s appeal as an investment alternative. The decline in the gold price is not only linked to a further strengthening in the US dollar but also evidence that physical buying of gold is beginning to fade.
Bangkok Post
Tuesday October 28, 2008
