CNI News
1 September 2022
Although the Monitoring and Steering Committee on the Gold and Currency Market has formed three sub-committees to monitor and adjust the domestic production, demand and supply of gold, the prices of the precious metal have continued to rise, according to gold-market observers.
The more measures the committee has taken, the more rampant the illegal gold trade is, Ko Nay Lin Khant, a gold market observer, told the CNI.
Ko Nay Lin Khant said, “It is not true that the committee neither wants to control nor leaves the gold market itself. As there is a wide gap between the demand and the supply, the harder it tries to control the gold prices, the bigger the black market is. Gold prices range between MMK 2 million and 3 million per tical in the black market. There is nothing the committee can do. Gold trading is carried out in the black market. The official price set by the Yangon Region Gold Entrepreneurs’ Association is about MMK 2 million per tical.”
In the domestic gold market, the demand is higher than the supply and goldsmith shops are forced to shut their doors on some days.
Kyat and US$ banknotes. (ROMEO GACAD)
A wide gap between the supply and demand has been caused by hoarding gold due to worries over the depreciation and inflation of the kyat and rapid rises of foreign currency prices, according to gold entrepreneurs.
Therefore, the only thing the Monitoring and Steering Committee on the Gold and Currency Market can do is to adjust the prices but it is unable to solve the problems caused by the excessive demand, Secretary U Ohn Myint of the Myanmar Gold Entrepreneurs Association told the CNI.
U Ohn Myint said, “Although the committee monitors the market, the only thing it can do is to adjust the prices. It cannot soothe the worries of the public away. People are hoarding gold because they are worried about their money. In my opinion, merchants can use their market theories to soothe the worries of the public away. Prices depend on the supply and the demand. When the demand is growing, we cannot prevent the public from buying gold. If the public wants to buy 100 visses of gold, we must be able to sell 200 visses of gold. Buyers will stop purchasing gold. It is the best way. It is a market principle. If you tell the public not to buy gold, they will want to buy more.”
The State Administration Council announced that action would be taken against anyone who failed to buy or sell gold and US dollars at their reference prices.
A display cabinet of gold jewelry in a goldsmith shop. (Getty Image)
However, the YGEA set the gold price at MMK 2,025,000 per tical on 31 August, gold was traded at MMK 3.2 million per tical in the black market.
Gold market observer Ko Nay Min Khant told the CNI, “If the restrictions on US dollars are lifted, the gold market can be stable. The committee does not need to control the market too tightly. The more restrictions they impose, the worse the market is. It is important to lift restrictions on US dollars. If the government lifts the restrictions, the market will become stable. Now, people are hoarding US dollars because there is a shortage of US dollars in the market. The market is in chaos. If gold prices rise too high, people will hoard gold without holding any money. So, people who can buy gold are safe. However, the grassroots will bear the brunt. The local currency is depreciating rapidly.”
Gold market observers said that if gold prices continue to rise, there is no problem for people who can buy gold but the grassroot levels will bear the brunt of the depreciation of the local currency.
Gold prices, which hit MMK 3 million per tical in September, are likely to fall between MMK 2.5 and 3 million per tical at the end of September, according to gold entrepreneurs.
