The Myanmar Gold Entrepreneurs Association has reminded its members not to conduct gold trading based on oral contracts amid raising gold prices, which has seen an upward trend since June.
“Executing oral contracts causes a lot of price volatility in the local. Therefore, we instruct our members to pay at the time of the transaction based on the current prices,” said U Kyaw Win, President of the association.
The instruction for the gold traders came out after extreme price fluctuations occurred recently in a single day of trading.
There is one big issue that Myanmar faces with its gold trade; the lack of a formal exchange system for the industry. Myanmar has been trying to establishing a new exchange called the Myanmar Gold Center Market (MGCM) since 2013, and expected to open the exchange in early 2016, and then again in 2019. However, it hasn’t managed to open the center so far.
There are two informal gold trading groups in Myanmar; one in Mandalay and another in Yangon. Despite the fact that the traders are members of the Myanmar Gold Entrepreneurs Association, one can often see differences in the price of gold between the two locations. This naturally leads to volatility and other problems in the market.
In the meantime, the association will monitor the activity of the gold traders. If traders fail to comply with the instructions from the association they will be reported to the Yangon Regional Government and related ministries.
The local price of gold reached about K1.1 million per kyattha (16.3 g) in the third week of June and K1.34 million on August 28. The price of gold was hovering around $1,542 per ounce on international markets.
The price of gold in the local market has reached a record six-year high, reflecting the global prices, according to local traders. They cite the ongoing trade war between China and the US, as well as slower global economy.