Friday, October 24, 2008

Thailand Gold Shops stop weekend gold bullion sales

Gold outlets stop weekend bar trade

CHAROEN KITTIKANYA and WORANUJ MANEERUNGSEE

Low world supplies and pronounced price swings have prompted local gold outlets to suspend trading of gold bars on Saturdays and Sundays until early next year, effective this weekend.

Customers crowd around a gold shop in Yaowarat district yesterday. APICHART JINAKUL

According to Panapong Suttheewong, manager of the Gold Traders Association, the gold outlets agreed yesterday to suspend trading of gold bars on those days, citing gold's short supply 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 market has been closed recently following the London and New York 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 (also know in Bangkok as China Town), 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.

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 promised. About 100-baht-weight of bars were scheduled to be delivered to her vault early next month.

Gold has gained increased appeal among world and local investors in recent years. 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.

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 to sell gold to cover their losses.

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."

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