US Debt Debate Worries Gold Buyers, Sellers in Asia
The political wrangling in the United States over the national debt ceiling has helped push the dollar to record lows, and the price of gold above $1,600 an ounce, double where it was two years ago.
In Asia, where gold is not just an ornament, but also a trusted investment, demand remains brisk. But with prices expected to continue rising, especially if the U.S. debt fight drags on, consumers and gold sellers say sales are going to be affected.
These one-kilogram gold bars sell for about $50,000 each. In Bangkok's Chinatown, the center of the Thailand's gold trade, record prices are prompting some shoppers to shift from ornaments to bars.
Despite the crowd of shoppers in this jewelry store, gold traders are worried.
Tanarat Pasawongse is managing director of Hua Seng Heng Gold Futures. He is watching the U.S. political debate over the debt limit. "If they cannot cut the spending and be able to increase the debt limit, the problem can become the default, which will lead to a higher pricing in gold," he said.
And that, he and other gold traders say, will mean lower sales.
In India, where gold jewelry is traditionally given to brides at weddings, buying patterns already are changing.
"It's an Indian wedding. So you can't do without gold. You can't do without diamonds. So I have to give. But yes, the amount will definitely get reduced," said one woman.
At least one company sees promise in gold prices: Gold to Go is a German company that sells automatic teller machines that dispense gold bars. It says sales are looking up. |