Tuesday, August 26, 2008

Prices likely to level off


Prices likely to level off

Ausiris gains clients from recent run-up


Gold prices are likely to stabilise over the next couple of months after a sharp drop in the past two weeks, according to Boonlert Siripatvanich, president of Ausiris Gold Investment, a gold trading service provider.

''I can only predict for a short-term period, say three months,'' he said, describing the current market as bullish.

Founded in 2003, Ausiris began providing customer service for gold investors in 2005. The company is a physical gold trader, but only registered members can trade with the company. Buyers pay 10% on the order date and the rest in the next two days. Buyers can either collect their purchase or deposit the gold at the company.

The company now has more than 1,000 members, Mr Boonlert said. This year membership jumped dramatically by 35% year-on-year in the first seven months, whereas 10% is the norm.

"The US dollar is the biggest factor" influencing gold, says Mr Boonlert. — SOMCHAI POOMLARD

According to Mr Boonlert, gold prices are heading down because American financial institutions and hedge funds have dumped their assets, including gold. The US dollar has also appreciated against other currencies.

''The question is whether they would go for liquidation or not. If that is the case, gold prices will decline, but not sharply in the near term as happened recently,'' he explained.

In the last month, the local price of a 96.5% gold bar, a benchmark in the market now, dropped by 2,600 baht per one-baht weight (15.24 grammes). Gold hit its highest price ever on July 15 at 15,450 baht. Then it fell 17% in one month. As of last Friday, gold prices had bounced back to 13,300 baht per baht-weight and the benchmark in London was $830 an ounce.

In technical terms, gold should be between $780 and $850 per ounce, he said. If the price can break the $850 barrier, the market will be bullish again.

Mr Boonlert, 46, the third generation of his family in the gold trading business, says investors need to follow some fundamental factors to understand the gold market.

''The US dollar is the biggest factor. If the dollar gets stronger against the euro, gold prices often weaken. Gold prices also move up and down in line with oil,'' he said. ''And of course, it's necessary to monitor world affairs. The Georgian-Russian war will affect gold prices if the situation gets serious.''

While investors increasingly show interest in gold when the market is volatile, traders benefit in such times because of skyrocketing sales.

Thais have changed their gold-purchasing behaviour as well. Where they used to wear their gold as a symbol of wealth, today they flash other symbols such as pricey mobile phones.

''For more than half of my life, I had only seen a bearish gold market. The bullish market has just come to the scene in the past decade,'' said Mr Boonlert.

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