Buyers at this gold shop find prices more attractive, but they have to wonder if it is a good investment when inflation seems under control. PATTARAPONG CHATPATTARASILL
By Terry Fredrickson
Oil is not the only commodity to see a steep fall in price recently. The price of gold has been falling too and analysts say the low oil price is one of the reasons. Why?
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As the price of oil falls, gold is falling too. Why?
On Saturday we looked at some of the reasons that world oil prices have fallen so steeply in recent months (http://www.bangkokpost.com/learning/work/446164/oil-price-falls-again-what-happening).
But that is not the only commodity that has seen a fall in price. Gold, too, has been falling and analysts say the lower price of oil is one of the reasons. Why?
Rightly or wrongly, gold is viewed by many as a hedge against inflation. That means that gold is expected to hold its value when the cost of living is increasing. Your 1000 baht buys less and less when prices rise, but the gold you own should increase in value.
One factor behind a rise in inflation is often a rise in the price of oil. But currently, we are seeing just the opposite. The price of oil has been dropping rapidly, thereby lowering our cost of living. This trend is likely to continue for some time and when the rate of inflation is not likely to rise, there is less interest in holding gold.
Here is a story from the Bloomberg agency from last Saturday which makes clear the relationship between the current falling oil prices and the falling gold prices
Gold falls B200 as oil prices dip
Bloomberg
Gold prices tumbled 200 baht at its opening in Bangkok at 9am on Saturday.
The Gold Traders Association announced the buying price at 18,150 baht and the selling price at 18,250 baht per baht-weight for gold bars.
The buying price for gold ornaments was 18,250 while their selling price was 18,650 baht per baht-weight.
The prices were adjusted four times on Friday, ending with a total loss of 250 baht per baht weight from Thursday's close.
In world markets, gold futures capped the biggest decline in three weeks as a stronger dollar and plunging energy prices curbed demand for the metal, Bloomberg reported from New York today.
Benchmark Brent crude yesterday fell the most in more than three years after the 12-nation Organization of Petroleum Exporting Countries kept its output target unchanged, cutting gold’s appeal as an inflation hedge. The dollar rose to a five- year high against a basket of 10 currencies on speculation that lower energy prices will boost the US economy, paring demand for bullion as an alternative investment.
Gold is heading for a second straight annual loss, the longest slump since 1998, after the dollar strengthened and inflation failed to accelerate this year.
“There was a selloff in crude oil and the dollar rallied, and there’s a question of disinflation here,” Bart Melek, the head of commodity strategy at TD Securities in Toronto, said in a telephone interview. “One of the motives to buy gold is to hedge against inflationary pressure, and we’ve got the opposite.”
Vocabulary
accelerate: to happen or make something happen at a faster rate - เร่ง, เร่งความเร็ว, เพิ่มความเร็ว
adjust: to change something slightly, especially to make it more correct, effective, or suitable - ปรับ
alternative: another choice - ทางเลือก, ตัวเลือก
analyst: a person whose job involves examining facts or materials in order to give an opinion on them - นักวิเคราะห์
annual: happening once a year - ประจำปี
appeal: a quality that causes someone to like or want something - ความดึงดูดใจ, ความน่าสนใจ, ความเย้ายวน
association: an official group of people who have joined together for a particular purpose - สมาคม
baht-weight: a unit of weight measurement for Gold in Thailand where 1 Baht is equal to 15.244 grams in raw form or 15.16 grams when it sold as jewellery -
bar: a long straight piece of metal or wood - ท่อน
benchmark: a standard that other things can be compared to, for example, to calculate prices - ตัวเปรียบเทียบ; การวัดเปรียบเทียบสมรรถนะเกณฑ์มาตรฐานหมายถึง การทดสอบเพื่อวัดความสามารถในการประมวลผล หรือการทำงานของ โปรแกรมใดโปรแกรมหนึ่ง หรืออุปกรณ์คอมพิวเตอร์ชนิดใดชนิดหนึ่ง โดยเทียบเคียงกับเกณฑ์มาตรฐาน
boost: to increase - เพิ่ม
bullion: gold or silver in the form of metal bars - ทองแท่ง, เงินแท่ง, แท่งเงินหรือทองจำนวนมาก
cap: to have an upper limit on an amount of money that can be spent or borrowed - มีขีดสูงสุด
commodity: a product or a raw material that can be bought and sold - โภคภัณฑ์
crude: oil that is still in its natural state and has not yet been refined for use by chemical processes - น้ำมันดิบ
curb: to control or limit something that is harmful - จำกัดขอบเขต
current: of the present time - ปัจจุบัน
currently: at this time; now - ในปัจจุบัน
decline: becoming less - การลดลง
demand: the amount of a product or service that people want - ความต้องการ
dip: to go downwards or to a lower level - ตกลง, ลดลง
disinflation: a reduction in the rate at which prices increase - เงินฝืด
factor: a fact or situation which influences the result of something - ปัจจัย
futures contract: a contract to buy or sell an amount of something at some date in the future for a certain price (for a commodity such as rice or oil) - สัญญาซื้อขายล่วงหน้า
hedge: a way of reducing the risk of losing money in the future because of changes in the value or price of something such as stock shares, currencies, raw materials, rates of interest, etc - การป้องกันความเสี่ยง
inflation: a general rise in the prices of services and goods in a particular country, resulting in a fall in the value of money - เงินเฟ้อ
interview: a meeting (often a public one) at which a journalist asks somebody questions in order to find out their opinions, experiences, etc. - การสัมภาษณ์
investment: the act of investing money in something - การลงทุน
motive: a reason for doing something - แรงจูงใจ
opposite: a person or thing that is as different as possible from somebody/something else - ตรงกันข้าม
ornament: a small attractive object used for decoration - เครื่องประดับประดา
output: the amount of something produced - ปริมาณที่ผลิตขึ้น
pare: reduce -
plunge: to fall quickly from a high position - ดิ่งลงมาจากท้องฟ้า
pressure: (of a force) to press against something - กดดัน, อัด, บีบ
rally: to improve after a time of performing poorly - ฟื้นตัว
rapidly: happening quickly - อย่างรวดเร็ว
rate: the level or speed at which something happens or changes, or the amount or number of times it happens or changes in a particular period - อัตรา
relationship: the way in which two or more people or things are connected with or involve each other; a connection - ความสัมพันธ์
security: financial assets such as stock shares or bonds - หลักทรัพย์, พันธบัตร, หุ้น, หลักทรัพย์ค้ำประกัน
slump: a period when an economy is much less successful than before and many people lose their jobs - ช่วงเศรษฐกิจตกต่ำ
speculation: ideas or discussion about what might happen or has happened or why something has happened without having complete information - การคาดการณ์
steeply: if something such as a cost rises steeply, it increases by a large amount; if it falls steeply, it decreases by a large amount - ซึ่งขึ้นสูง; ซึ่งลดลง
strategy: a plan or method for achieving something, especially over a long period of time - ยุทธวิธี, แผนการ
target: something you want to achieve; a particular number or amount that you want to achieve - เป้าหมาย
trader: someone who buys and sells things - ผู้ค้า
trend: a gradual change or development that produces a particular result - ทิศทาง แนวโน้ม
tumble: to fall down - ล้ม,ล้มลง,ตกลง,หกคะเมน
