Spiralling gold prices have forced tens of thousands of goldsmiths into unemployment nationwide, as their numbers have dropped almost in half, from 300,000 last year to between 150,000 and 200,000 at present, says the Gold Traders' Association (GTA).

President Jitti Tangsithpakdi said as many as 50 gold shops, mostly small and medium-sized enterprises, had gone out of business this year, because they were unable to buy gold of very high value. Local gold buyers are also hesitant to buy at this time, due to the expensive prices. There are around 600 gold store chains nationwide.

He said the situation was unlikely to improve any time soon, as international traders continued to speculate in gold. Hong Kong gold prices opened yesterday at US$626.50 to $627 (Bt24,004 to Bt24,026) an ounce.

Jitti said chances were high the price in the world market would surpass $800 per ounce this year. There had been mid-year fluctuations in prices, because investors were turning to gold and away from dollars, added Jitti, who also predicted the price would continue to fluctuate wildly over the next couple of months.

Gold shot up to $725 per ounce in London on May 15, but the price has eased since last month. The price was $622 per ounce on Wednesday.

The domestic gold price has also fluctuated, from Bt12,650 per baht weight on May 15 to Bt11,300 per baht weight on Wednesday.

"The price is very unstable. We cannot predict the gold price in the short term, but we do see the value going up in the long run, because demand for gold will increase," said Jitti.

Factors that drive gold's value up include rising oil prices, uncertainty over international conflicts and global economic trends. North Korea triggered international jitters on Tuesday with its missile tests, which created tensions between that country and others, such as Japan, the United States and South Korea.

Also, the simmering conflict between the US and Iran has made traders nervous.

Rising gold prices have decreased consumer demand and caused almost half of all gold-shop employees, most of them goldsmiths, to be thrown out of work.

"It's a difficult time for gold traders when the price fluctuates so much. With fewer jobs available, some goldsmiths have decided to return home and farm instead," said Jitti.

With the slowdown in business growth, Jitti predicted the volume of gold imports would be much lower this year, amounting to less than 100 tonnes, compared with last year's volume of 146 tonnes.

Gold imports decreased 24 per cent to $796 million in the first five months of the year, compared with the same period last year. Last year, gold imports rose 71.9 per cent to $1.97 billion from 2004.

Meanwhile, Jitti said the association could not support Internal Trade Department plans to set up a system announcing the price of gold each hour.  

Petchanet Pratruangkrai

The Nation