GOLD prices may have retreated from their record highs of a few months ago – but now is not the time to invest, say local dealers.

During the second week of March, the price of an ounce of gold on the world market reached US$1030. It is now down to US$878, and as of June 5 the local price stood at K551,000 a tical. But demand is cool, said an expert from one gold shop.

The local price of gold is related to the world price, but also reflects local demand and the local economic situation, as well as the supply-demand cycle, says the owner of a gold shop in Maha Bandoola Street.

“In the current economic situation, people tend to spend their money on other things than gold, especially since schools are now open. People only buy gold if they have money to spare,” said one owner of a gold shop.

The gold price used to rise in the rainy season because of the closure of gold mines in Upper Myanmar and the consequent reduction of the supply to Yangon, said the owner.

“Buying gold has certain advantages – you can resell it to the shop you bought it from, it holds its value in disasters and is easily convertible into money. But because of the high price of gold now, it's not a good time for buyers to invest,” he said.

Gold traders in Yangon set the local price by checking the world price three times a day, taking into a account local demand. “Although the world price is high, if the demand is low in the local market, the price doesn’t really correspond to the world price and the current situation here forces the demand for gold downward, as it has been for the past two years,” said the owner.

At the same time, the number of gold shops in Yangon has also fallen in the last three years. No new ones have opened in the last two years, say industry sources. “The price for a tical is around K500,000 but in 1993, the price was just K20,000, so opening a new gold shop these days represents a huge investment” said the owner.

The increased amount of money required to open a gold shop, with gold selling for around K55 million for 1 viss, has deterred investment, the shop owner said.