Dealers say soaring prices are deterring buyers
GOLD prices have continued to rise in value against the US dollar in line with international markets, figures from Cambodia’s largest gold dealer show.
According to Phnom Penh’s Ly Hour Exchange, one damlung of gold was worth a record-high US$1,340 Tuesday, up 6.4 percent from $1,260 one month earlier. Two weeks earlier, gold was trading at $1,200, Ly Hour owner Sieng Lim said.
“The surge in gold prices in Cambodia is based on the rise in gold prices on international markets,” she said, attributing it to the devaluation of the US dollar on world markets.
Gold prices have never reached highs like this in Cambodia.
Because the Cambodian riel stayed stable against the dollar as it fell, its value against gold has also fallen, she said.
One US dollar bought 4,192 riels Tuesday, according to the rate published by the National Bank of Cambodia.
A damlung is the commonly used Cambodian measure for the precious metal, equal to 37.49 grams or 1.32 ounces. Most gold in Cambodia is imported from Hong Kong and Singapore, Sieng Lim said.
Gold on international markets has gained more than 25 percent this year as the US Dollar Index, a six-currency gauge of the greenback’s performance, tumbled 7.7 percent. Gold bullion and the dollar tend to move in opposite directions.
However, gold declined for the first time in three days in London on Monday as the dollar rebounded and some investors sold the metal to lock in gains after its record rally.
Gold for immediate delivery lost as much as $6.60, or 0.6 percent, to $1,097.20 an ounce (around $1,448 per damlung) Monday. December gold futures slipped 70 cents to $1,100.70 an ounce on the New York Mercantile Exchange’s Comex division. The US Dollar Index added as much as 0.3 percent after slipping to a 15-month low.
“Profit-taking has seen the metal dip back,” James Moore, an analyst at TheBullionDesk.com in London, said Tuesday in a note. “Short-term direction will depend largely on the dollar. Gold could be poised for another upside leg to challenge the $1,120 area” should the US currency weaken, he said.
Virin Ratanak, owner of Virin Ratanak Gold Jewellery, a Phnom Penh-based gold dealer, said demand had dropped as prices surged to record levels, declining to give sales figures.
“Gold prices have never reached highs like this in Cambodia, so customers hesitate to buy it because they are concerned that they may lose if prices go down,” she said. “Now, most of my customers come only to buy diamonds.
According to Ly Hour Exchange figures, gold hit $1,190 per damlung in August 2008, dropping to a low of $970 in January. It has been on the rise ever since, Sieng Lim said.
Chan Sophal, president of Cambodian Economic Association, said Cambodians traditionally used gold as a store of wealth so any rise in prices was good news.
Cambodia’s gold reserves have reached record highs this year, climbing to $2.624 billion by the end of the second quarter, according to International Monetary Fund data.
ADDITIONAL REPORTING BY BLOOMBERG