Gold prices in Phnom Penh have plummeted by almost a quarter in the past six months as international prices dropped, sparking a rush on buying gold locally, traders said Tuesday.
Gold was selling at $1,540 per damlung (26.67 damlung is equal to 1 kg of gold) at the Ly Hour exchange on Tuesday, a drop of 24.5 percent compared with January 3, when the price quoted at the exchange was $2,040.
A member of staff at Phnom Penh’s Ly Hour exchange, who declined to give her name, said that the local price drop was due to the international gold market.
Reuters reported Monday that investor confidence in the international gold market had been negatively affected by speculation that the U.S. Federal Reserve may allow interest rates to rise, affecting the value of gold by making it less attractive to investors.
Global market gold prices have rebounded slightly over the past three days as investors interpreted the previous week’s plunge in price overdone, Reuters reported Tuesday.
The Ly Hour staff member said that in Cambodia the dip in price had led to a 20 percent rise in gold buying in the past three months, with many speculators looking to profit if and when the price goes back up.
“The movement in buying goes up when the gold price continues to drop,” she said, adding that many people were buying and quickly offloading gold to try to exploit volatility in the price.
Gold is widely seen as a safe investment, and many Cambodians use the commodity to store their wealth rather than using banks.
“Some people buy gold to keep for the future for a profit because they still don’t have trust, and they are afraid they will lose out if they buy dollars,” the Ly Hour staff member said.
A gold seller at Khay Sakhav Gold and Diamond shop, who also declined to give his name, agreed that there had been a rush of people looking to buy gold while the price was low.
“People just come and buy more gold, they are normal people and businessmen,” the seller said.