Thailand's gold outlets stop weekend bar tradeEven though the price of gold is now very low, world supplies and pronounced price swings have prompted local gold outlets in Thailand to suspend trading of gold bars on Saturdays and Sundays until early next year, effective this weekend.
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| Customers crowd around a gold shop in Yaowarat district yesterday. APICHART JINAKUL |
According to Panapong Suttheewong, manager of Thailand's Gold Traders Association, the gold outlets agreed yesterday to suspend trading of gold bars on those days, citing gold's short supply worldwide and the precious metal's frenetic price swings due to rampant price manipulations in the market.
However, he insisted that trading of gold ornaments would be available as usual on the weekend.
Mr Panapong said one of the difficulties 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.
"Most importantly, the Hong Kong gold market has been closed recently following the London and New York gold markets, meaning we lack reference prices to quote during the weekend," he said. "That makes it tougher to prevent losses."
Like many small gold investors, Sukanda Tanaburamas rushed to queue at the gold shops in Yaowarat, the country's trading centre, after being informed that gold bar trading would be suspended this weekend. She bought 50-baht weight (one baht is 15.16 grammes) yesterday and admitted she was a bit worried, but that seeing other active investors assured her.
Almost all Thais are converting cash to gold as they know the high US dollar is only but a temporary phenomenon, which most believe will start to be reversed next week.
Nongluck Juengteerapanich, another small gold investor, said that if a gold shortage was the reason for the suspension, she was worried about whether local traders could deliver bars as they had promised. About 100-baht-weight of bars were scheduled to be delivered to her vault early next month, but so far she has not seen any gold arrive.
Gold has gained increased appeal among world and local investors in recently as they convert cash to gold. Over the last five years, Thailand's gold trading structure has shifted markedly to bars from ornaments. Gold bars currently make up 80-90% of daily gold trading at outlets. Thailand's economists believe that in part the high price of the US dollar is caused by the need to acquire US dollars to buy gold. On average, each Thai man, woman and child owns about 52 baht of gold and there has been a frenzy of gold buying in the country since last April.
Gold bars were quoted yesterday at 12,500 baht per one baht-weight, a drop from 12,600 baht on Thursday and against 13,350 baht on Monday.
Gold slipped more than 2% on world markets yesterday, moving toward the 13-month low struck the previous day, as early buying subsided, equities tumbled and oil turned lower despite the supply cut by Opec.
Gold has dropped more than 16% so far this month, heading for its biggest monthly percentage decline since 1983 and its fourth-biggest monthly drop in three decades. Tumbling equities markets drove investors in the West to sell gold to cover their losses and so in part exacerbating the rise in the price of the US dollar.
Gold was trading at $707.10 an ounce, down $15.40 from the New York close, with a rising dollar against the euro adding to the selling pressure. It hit an intraday low of $704.35, not far from a 13-month low of $697.45 hit on Thursday.
"Gold mines refuse to sell their output, while price manipulation abounds," said Mr Panapong. "We don't know when the prices will stabilise."
"Mines all over the world are hording their mined gold."