The global economy has been slowing down due to the novel coronavirus outbreak with stock markets across the world also falling.

Stock trading in Myanmar has decreased as people are now buying gold for investment purposes, according to Myanmar gold merchants.

The world gold price closed at US$1662 per ounce on March 11, up from $1602 on March 1. The London Bullion Market Association (LBMA) on Wednesday said gold trading volume hit daily high of $100 billion on Monday. 

If there is a big price gap between foreign and local gold markets, it could lead to illegal gold trading. Therefore, the gold price is calculated based on the world gold price as well as the exchange rate.

“Local gold price has fallen as a result of the situation in the international market. Even the world stock exchange halted twice, so at the moment we cannot predict the changes in the domestic gold price,” said Yangon Region Gold Entrepreneurs Association secretary U Win Myint.

The global gold price was only around $1580 per ounce at the beginning of February but spiked to $1690 on February 24.

The local dollar exchange rate was at K1663 in February but it plunged to K1315 on Wednesday.

Although the global gold price is rising, Myanmar’s dollar exchange rate is dropping, which in turn affects the gold demand domestically.

This results in the local gold price dropping, said gold traders.

The price per tical of gold was around K1.25 million in February but had dropped to K1.186 million by March 11.

“The US dollar exchange rate is weakening, while the reduced import and manufacturing activities also have an impact.” 

“No matter how high the international gold price is, the local price is bound to drop. But the situation will reverse if the dollar exchange rate increases,” said Mandalay Gold Entrepreneurs Association chair U Tin Tun.

As The Myanmar Times reported last month, the coronavirus epidemic is hitting Myanmar’s important manufacturing and tourism industries as well as disrupting border trade.

Fitch Solutions Macro Research last month lowered its forecast for Myanmar’s real GDP growth for the financial year 2019-20 to 6.3pc from 6.5pc, down from an actual 6.8pc in 2018-19. It expects the slowdown in tourism activity to account for most of the impact as Chinese nationals accounted for nearly a third of over two million foreign tourists in 2019.

In particular, border trade between China and Myanmar is looking at possibly a 50pc reduction from the usual US$400 million per month, according to one government estimate.

While trade was booming, local gold price reached K1.25 million in February and then jumped to K1.3 million, said Myanmar Gold Entrepreneurs Association chair U Kyaw Win. – Translated

Source: https://www.mmtimes.com/news/myanmar-gold-price-drops-us-dollar-weakens.html