Despite a recent decline in the price of gold, demand for the precious metal remains weak in Burma, while the number of those seeking to sell has increased, according to sources.
One kyat-thar (16 g) of solid gold cost 675,100 kyat (US $865) in Rangoon last month. On Thursday, the price was 656,000 kyat ($841)—a drop of 19,000 kyat ($24), or nearly three percent.
“Currently, we don't have many customers in our shop, despite the fact that gold prices have gone down,” said the owner of a gold shop on Rangoon's Shwebontha Street. “Right now, there are more people looking to sell than to buy. This is unusual, because normally people would try to avoid selling at a loss.”
A sales manager from another shop said that one reason for this recent trend could be that many people are selling off their gold because they are in need of cash in hand due to a shortage of money in circulation.
An official from the Myanmar Gold Entrepreneurs Association (MGEA) suggested that this could also be the reason for sluggish sales, saying that demand for gold has not recovered despite falling prices because many potential customers are more interested in holding onto their cash than in buying gold.
The official also denied that the MGEA, which was founded in 2002 by the Union of Myanmar Federation of Chambers of Commerce and Industry and authorities from the then military regime to maintain gold-price stability, has had any role in directing recent trends.
“The MGEA neither adjusts nor manipulates gold prices in the market. There is just no demand,” said the official.
A gold dealer told The Irrawaddy that he thought lower prices would bring back buyers, but so far that hasn't happened.
“Usually, whenever prices go up, customers will sell off their gold and the market will function. Likewise, when the price goes down, demand rises and the market becomes normal. But that is not the case now,” explained the dealer.
A retired professor from the Rangoon Institute of Economics said that besides the shortage of Burmese banknotes in circulation, another factor fueling the sale of gold could be the recent weakness of the US dollar. He said that some dollar-holders may be selling off their gold because they don't want to exchange their dollars to kyat at an unfavorable rate.
“A market needs to function continuously. If selling or buying stops for any reason, there will definitely be a problem. The kyat, the main currency used inside Burma, is now going up in value, while foreign currencies are falling. So it is like people are exchanging their goods for money in order to meet their day-to-day needs,” said the professor.
Currently, one US dollar is equivalent to 805 kyat in Burma's domestic currency exchange market.
