Several gold shops have decided to close temporarily, saying it would be their only chance to stem further losses after the price of gold sunk to a two-year low. The bearish trend is set to continue.
The owner of Aurora Gold shop on Sukhumvit Soi 103 said she decided to close shop yesterday and has yet to decide when to resume business.
"I took this chance to make minor renovations instead of opening the store only to lose more cash. Since the week began, the sharp fall in gold prices prompted people to rush to the shop to buy gold. Our gold bullion is out of stock and we are not going to place orders until the global prices settle," she said.
Normally, gold bullion buyers have to pay first and wait for a week to receive the products, but now demand has shot up and there is no guarantee how long they have to wait.
Given the low prices of the precious metal, she cautioned buyers to closely watch how sellers measure the weight of gold and advised them to go to well-known shops to make sure of the gold's purity as some shops may cheat buyers to cut their losses.
However, some shops that open were as usual refused to sell products, said another gold shop owner in Sukhumvit Soi 103.
"We don't sell [gold] at this price as it is way too much of a loss but we need to keep the doors open as some clients must come to pay interest to keep ownership of the gold they put here as collateral to secure loans," she said.
Cash withdrawals at banks and ATMs on Yaowarat Road _ a hub of gold shops _ surged significantly on Wednesday, the first day when gold shops resumed operations after the long Songkran holiday, but transactions were slow yesterday.
Lertsak Supitayakul, first senior vice-president of Kasikornbank, said financial transactions at the bank's branches on Yaowarat Road jumped to around 150 transactions per branch per day, compared to the usual 100 per branch.
Kamoltun Pornphaisarnvichit, analyst manager at GT Wealth Management, said gold shops have suffered only a minor impact from the gold price plunge as they did not pile up gold ahead of the Songkran holiday, when the global gold price started to slide.
"Pawn shops are more worried as gold accounts for 80% of items put as collateral for loans and a 15% discount on gold from the market price before the Songkran holiday could not offset the sharp fall in prices after the holiday," he said.
Mr Kamoltun recommended investors change their mindset about gold investment as the correction period could last up to two years and it is likely to be the first year in a decade that gold investment will have a 7-10% loss on returns.
Jitti Tangsithpakdi, head of the Gold Traders Association and owner of Chin Hua Heng shop, warned gold shops to closely monitor the gold price situation due to its high volatility.
Local gold prices set by the association were changed nine times yesterday and eight times on Wednesday.
Gold bullion yesterday clawed back a 50-baht-per-baht-weight gain to 19,000 for gold sold by gold shops and 18,900 for gold bought by gold shops after a combined loss of 2,400 per baht weight on Wednesday.
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Writer: Darana Chudasri & Somruedi Banchongduang