NESDB: Gold price drop temporary
- Published: 21/05/2013 at 01:26 PM
- Online news:
The decline in the global gold price will be only temporary and comes on the back of speculation that Italy and other countries in Europe could sell gold reserves for debt repayment, the secretary general of the Office of the National Economic and Social Development Board (NESDB), Arkom Tempitayapaisit, said on Tuesday.
Reuters file photo
Mr Arkom said he disagreed with an analyst at a foreign bank who forecast that the gold price is now on a five-year downward trend and will fall below US$1,000 per ounce.
It would be difficult for the gold price to go down for five years, because gold is not only held as a reserve it is also a speculative commodity. The current decline in its price was because some countries in Europe have insufficient cash reserves to make debt repayments. One of their options is to sell some of their national gold reserves, he said. This bulk selling brings down the price.
Cyprus had earlier sold gold and it is expected Italy will soon follow suit. This would bring down the global gold price for a short time, he added.
The central bank also keeps gold as a reserve and if it sells gold at this time it would face a loss because it bought in at a higher price, he said.
Reuters reported the gold price was down for the eighth straight day to US$1,338.85 per ounce on Monday, May 20.
The gold price dropped to its lowest level in two years, at US$1,321.35 an ounce, on April 16 on investors' concerns the US would delay its plan for further quantitative easing (QE) to stimulate the economy, which is showing signs of recovery.
On Monday, the Gold Traders Association had changed gold prices for five times, with a total decline of 200 baht on the day. Buying price closed at 19,050 baht per baht weight and selling price at 19,150 baht for gold bar.
The gold prices opened up 450 baht on Monday’s close on Tuesday morning. Buying price opened at 19,500 baht per baht-weight and selling price at 19,600 baht for gold bar.
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