Gold prices ease in line with rupiah's trend
JAKARTA (JP): Gold prices eased over the weekend after reaching a high of Rp 47,000 per gram on Wednesday as most people sold their gold to profit in the bullish market.
Some traders told The Jakarta Post Saturday that the prices for both 24 carat and 22 carat gold dropped at the end of the week as the rupiah gained a footing against the U.S. dollar.
Ivan, an employee of Abadi gold store in Tebet, South Jakarta, said Saturday that the price of 24 carat gold dropped to Rp 40,000 (US$8) per gram on Friday and Saturday from Rp 47,000 per gram on Wednesday.
The price of 23 carat gold fell to Rp 36,000 per gram from Rp 41,000 per gram on Wednesday. The price of 22 carat gold dropped to about Rp 30,000 per gram from its peak of Rp 35,000 per gram, he said.
Gold prices on the local market have increased by an average of 50 percent since early July, when the country was first hit by a currency crisis.
The price of gold ranged from Rp 23,000 to Rp 25,000 before the currency crisis, which has cut the value of the rupiah by over 60 percent against the dollar.
The rupiah, which was approximately Rp 2,400 to the dollar in early July, persistently dropped against the greenback in the last few months. It recorded its lowest level of Rp 5,800 against the dollar Wednesday because more people rushed to buy dollars due to concern about President Soeharto's health. It inched up slightly on Thursday and Friday as the President retuned to his daily activities after a 10-day rest.
A Liong, the owner of the Victoria gold store in Cikini Market, Central Jakarta, said that the gold prices could continue to fluctuate in line with the rupiah's direction.
"It is very difficult to set a fixed price in a currency crisis. If we hike the price to adjust with the rupiah's value, there will be no buyers," he told the Post.
"But if we maintain the old prices we cannot survive because the goldsmiths' payments are based on the size of gold ingots, which are given in dollars," he added.
The sharp increase in prices have significantly affected gold sales in the past four months. "Most people come to sell their gold jewelry rather than buy more," a trader said.
"They still want to sell their gold even though prices have been dropping since Thursday," Liong said.
Dewi, the owner of Bonwit gold store in Melawai Indah shopping center, South Jakarta, said transactions at her store were also dominated by sellers, who wanted to benefit from the price increases.
She said people were waiting for the recovery of the rupiah before buying gold jewelry.
"People are still willing to sell their gold pieces because they expect prices will continue to drop next week," she said.
In Pondok Gede, Bekasi, prices were lower. The Asia Indah and Kemenangan gold stores in Pondok Gede Plaza set prices of Rp 28,000 per gram for 22 carat, Rp 30,000 per gram for 23 carat and Rp 40,000 for 25 carat gold. (gis)