A customer examines some gold bangles on her wrist at the Thamadi gold shop on 26th Street.

THE Yangon Gold Entrepreneurs’ Association will take an office on December 17 on the lower block of Shwebonthar Street. The aim of the association is simple – to set and implement a standard gold price in Yangon Division.

As it stands, traders simply set their own price depending on the supply of gold they have, available to them and what they gauge demand to be. Prices, therefore, vary from trader to trader.

U Ba Than, the association’s chairman, said this would soon change and a single price will be set for the entire division.

“The gold market is just like street market but in the future it will be much less variable,” he said.

He said the association would determine the price based on the global rate, the strength of the US dollar versus the kyat and local supply and demand.

The association will set a price that will be agreed upon by the association every day.

“If you go to 10 different gold shops, you’ll get 10 different prices. But when the association’s office is up and running anyone will be able to just ring up and find what the price is,” he said.

A key aim of forming the association and regulating prices, he said, was to limit rapid speculation when the price increases.

U Ba Than added that anyone working in the gold industry is welcome to join the association, which opened to general membership on November 28. The fee to join is K300,000 and there is a yearly K50,000 membership charge.

“We will very quickly find out whether prospective applicants to the association are genuinely employed in the gold industry. We have no intention of admitting anyone who we believe is involved in market speculation,” he said.

AS Yangon gold traders organise to set an official price for Yangon Division, demand for the precious metal continues to cool, both on the world market and here in Myanmar.

Though local prices tend to follow the broad trends of the world gold price, many local factors intervene to insulate the local price from volatility, or to produce slight deviations in the trend.

The price of gold reached a high for the year last March 17, at US$1011.25 per ounce at the London Afternoon Gold Price Fixings. By November 13 the price had fallen to $713, and since December 1 it has ranged between $766 and $780. Locally, gold per tical (16.25 grams or 0.576 ounces) has traded in the range K519,000-K542,000 over the past couple of weeks.

U Win Myint, the secretary of the Yangon Gold Entrepreneurs’ Association, which is advocating the setting of a daily fixed price for gold, believes the price will continue its recent declining trend. But expert opinion varies as to why.

“Beans and pulses and paddy are harvested at this time of year, so traders sell gold to buy crops. The resulting increase of gold supply over demand tends to lower the price,” he said.

Maung Kain gold shop manager U Thar Naing cites the dollar exchange rate with the kyat as a factor explaining the link between the local and the world price of gold. “Normally, the price of gold and the dollar exchange rate tend in different directions. If the world price of gold continues downwards but the exchange rate remains stable or improves for the kyat, the local price will not follow the world price down too far.”

At the same time he said: “In previous years, we had excellent sales to farmers during this season because farmers buy gold after selling their crop. We rely on the farmers or the middle class. But at the moment, sales are cool.”

“The fall in sales is not related to the price. Since people don’t need gold as a commodity, they buy only if they have excess cash to spend,” said Power Gold Shop owner Daw Latt Latt, who thinks the local price depends primarily on the global rate.

But U Aung San Win, owner of the Aung Thamadi gold shop in Mandalay – which is closer to the country’s gold mines – had a different point of view.

“My sales have fallen by 30 percent since mid-November. Customers preferred to buy motorcycles when government issued licenses, and to go to automobile auctions. Also, the real estate and car markets are very slow. Oil diggers and sugar cane cutters are resting because of price falls in their commodities, so they also don’t buy from us any more. The supply now exceeds demand.”

U Aung San Win added: “When supply is greater than demand, gold production typically falls. I would not recommend that people sell gold now and buy it back at a lower price, because I don’t expect the price to fluctuate that much.