Dealers in Phnom Penh report record prices as global markets lose faith in the US dollar
Photo by: HENG CHIVOAN
Young potential gold buyers take a look at necklaces made from the precious metal at a jewellery shop near Central Market.
I think that the price of gold [in Cambodia] is likely to continue to rise.
GOLD prices in Cambodia have reacted to the surge on world markets with the price climbing 4.6 percent over the past fortnight, Phnom Penh-based dealers told the Post.
Cambodia’s largest gold dealer, Ly Hour Exchange in the capital, hit a recent high of nearly $1,260 a damlung, said owner Sieng Lim. A damlung is the commonly used Cambodian measure for the precious metal, equal to 37.49 grammes or 1.2 ounces. Two weeks ago the price was at $1,200, she added.
“The rise in the price of gold in Cambodia is due to the surge in gold prices on international markets as the US dollar experiences weakness,” she said, adding that in Cambodia the dollar has this month remained stable against a riel currency that has been propped up in recent months by the government, most notably in August.
The riel nevertheless depreciated 1.8 percent against the greenback since April, the Economist Intelligence Unit (EIU) said in its October outlook for Cambodia.
The rate was largely unchanged at the end of last week at 4,176 riels, according to ANZ Royal bank rates.
On Sunday, gold prices reached a new high of $1,258 a damlung, said Sok Ly Meng, gold jewellery manager at Mokod Pich Gold Shop near Central Market, citing global price rises in recent days.
Sieng Lim said it remained difficult to predict how gold prices were likely to proceed in the coming weeks given the dependence on international markets. However, international analysts were predicting last week that gold would realistically continue to move beyond Thursday’s high of $1,062.70 per ounce ($1275.24 a damlung) with some commentators predicting a likely target price of $1,500 per ounce ($1,800 a damlung).
“There’s been talk this week of $1,500, and I see that as perfectly achievable,” Arthur Hood, chief executive of Australia’s second-largest gold company, Lihir Gold Ltd, told Australian Broadcasting Corp television Sunday.
Virin Ratanak, owner of Virin Ratanak Gold Jewellry, another Phnom Penh-based gold dealer close to Central Market, said that with international prices pushing up the local selling rates to record levels, demand had since dropped, but she declined to say how much her shop had sold in recent weeks.
“I think that the price of gold is likely to continue to rise,” she said.
Gold prices soar in 2009
Recent prices rises in the precious metal mean that Cambodian prices have increased 29.8 percent this year during a period in which the riel has remained fairly stable to the US dollar and inflation has generally been stagnant – official data last week showed that consumer price index inflation was just 0.5 percent in September month on month.
According to Ly Hour Exchange, the price of gold hit a ceiling in August last year at around $1,190 per damlung, but gradually dropped to $970 a damlung by January. Since then, it has steadily surged to $1,258 a damlung Sunday.
An ounce of gold was $1,049.60, or $1,259.50 per damlung, on international markets Sunday, which represents a 4.95 percent surge from $1,000 (or $1,200 per damlung) an ounce on October 1.
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 (IMF) data.
Gold reserves in the Kingdom have generally been kept at levels similar to foreign exchange reserves, which have also hit highs this year despite predictions by the EIU in particular earlier this year that Cambodia’s forex reserves would drop.
However, Cambodia has been helped by the IMF, which allocated $108 million in Special Drawing Rights in August.
Foreign exchange reserves were $2.522 billion at the end of August, Prime Minister Hun Sen said Thursday.
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