Price uncertainty forces jewelry stores to close

JAKARTA (JP): Many gold jewelry stores in Jakarta have temporarily closed due to uncertainty in gold prices and the sluggish market.

Some traders told The Jakarta Post yesterday the sharp fluctuation of the rupiah against the U.S. dollar had caused difficulties in fixing prices.

"This makes gold trading more risky," one trader said.

Many of them preferred to close their stores and wait until the rupiah returned to normal. "Moreover, the market is not so promising. With the current high prices, only a few people are buying gold," one trader said.

The difficulties in fixing the price was also due to the lack of reliable information on gold prices, they said.

A Liong, owner of the Victoria gold store in Cikini Market, Central Jakarta, said the uncertainty in gold prices in the past four months had scared away buyers.

"Traders do not dare to sell their gold jewelry and people do not want to buy jewelry, because prices are uncertain," he told the Post yesterday.

At his store, the price for 22-carat gold was set at Rp 50,000 per gram yesterday, while 23-carat gold was at Rp 56,000 and 24- carat gold at Rp 62,000.

"It is very difficult to set a fixed price during this economic crisis. If we increase the price to adjust to the rupiah's value, there will be no buyers," he said.

He said he had temporarily laid off three goldsmiths because he did not intend to add to his jewelry stock.

"I decided to sell the old stock first, so I have to lay off the goldsmiths temporarily. But I will hire them again if demand and prices stabilize," he said.

Leo, owner of the Asia Indah gold store, shared the same view and said his store also faced a decline in demand.

"I've had to lay off some of my goldsmiths and close my store for several days because operational costs are higher if the shop remains open," he said. He said he was selling 22-carat gold for Rp 35,000 a gram yesterday.

Gold prices in the local market have increased by an average 75 percent since early July, when the country was first hit by the currency crisis.

The price of gold ranged between Rp 23,000 and Rp 25,000 per gram before the currency crisis, which has cut the value of the rupiah by over 70 percent against the dollar.

Last week, gold prices in Jakarta jumped to Rp 100,000 per gram, following the drastic fall of the rupiah to Rp 10,000 in Singapore trading.

The rupiah, which was approximately Rp 2,400 in early July, has persistently dropped against the dollar in the last few months.

Zulkifli, owner of the Abadi gold store in Tebet, South Jakarta, said transactions at his store were also dominated by sellers who wanted to benefit from the price increase.

At his store, 22-carat gold was being sold for Rp 40,000 per gram, 23-carat at Rp 46,000 and 24-carat at Rp 52,000.

Most gold stores in Senen and Cikini, Central Jakarta, and Melawai, South Jakarta, stopped buying gold jewelry. Some even closed their stores due to the bearish market.

Ellen, owner of the Bandung gold store in Cikini, and Dewi, owner of the Bonwit gold store in Melawai shopping center, said they had stopped buying gold and focused on selling due to low demand.

Ellen said her store would only buy 24-carat gold jewelry at Rp 65,000 per gram and 23-carat for Rp 45,000.

Mira, owner of the Mirah gold store in Senen, said she had only opened her store for two hours since Friday.

"People have just come here to ask about gold prices, not for buying or selling," she said. (gis)