RANGOON — Local gold prices reached a 27-year peak on Wednesday, following the continued weakening of the kyat against the US dollar, industry sources said.
Gold dealers told The Irrawaddy that the local price for one tical, a traditional Burmese weight measurement equal to 16.33 grams (or just over a half ounce), reached 800,000 kyats (US$730) on Wednesday, an increase from last week’s price of 720,000 kyats. They said the price is the highest on record since the country first opened its economy to free trade in 1988.
While world gold prices remained relatively stable at around $1,180 per ounce this week, local gold prices skyrocketed following the increase in the black market exchange rate for US currency (to 1,260 kyats per dollar).
“This is the highest amount since 2012,” said Kyaw Win, secretary of the Myanmar Gold Entrepreneurs Association, referencing the time when the price of gold was 790,000 kyats per tical.
After the increase in 2012, when the world price was about $1,900 per ounce, it declined to about 680,000 kyats per tical until late May of this year.
“We can’t control gold shops. We can just encourage them not to play the market,” Kyaw Win said.
It is a long-held Burmese custom to save gold, particularly when rumors spread that the value of the Burmese kyat is decreasing.
But in what may indicate a break from traditional mind-sets, demand for the precious metal has been muted, according to Kyaw Win and a gold seller in Rangoon.
Zaw Aung, the owner of Tate Sein Gold Shop in Pabedan Township, said he has received many inquiries from customers asking about recent gold prices with the intention of selling.
“Demand is not that high—recently, there have been more sellers than buyers,” Kyaw Win said.
Despite what would seem to indicate confidence in the local currency’s long-term strength, Zaw Aung said he anticipates further increases in the price of gold.
“If the exchange rate for US dollars reaches 1,500 kyats [to the dollar] as some people expect, the gold price will definitely increase over 800,000 kyats per tical,” he said.
He added that he is not worried about the impact of the fluctuating prices, and feels that as the country gains more experience with an open economy, the market will solve such volatility on its own.
“The local price is different even between morning and evening. I hope that it will be all right soon after the exchange rate for US dollars has declined,” Zaw Aung said.
Due to the high exchange rate, The Irrawaddy reported on Tuesday that consumers and businesspeople have been unable to buy dollars at private banks, even in small amounts, leading to currency exchange through black market vendors at inflated rates.