Price rise could wipe out retailers

       The number of retail gold outlets is expected to plunge over the next five years,as continued high prices make it harder to stay afloat, while the growing popularity of paper transactions in the futures market saps demand for physical gold.
       "We are afraid that only 10% of the gold outlets now totalling about 6,000 can stay alive over the next five years,with the rest being forced to close as higher gold prices would lead people to sell the precious metal and nobody will be buying," said Jitti Tangsithpakdi, president of the Gold Traders Association.
       Mr Jitti and association members met yesterday with Commerce Ministry officials to discuss measures to help gold outlets stay afloat in a volatile market.
       Transactions by gold outlets have sunk by as much as 45% since the Thailand Futures Exchange (TFEX) introduced gold futures in February, he said.
       The value of gold futures contracts traded over the last two days on the TFEX has exceeded 4 billion baht.
       The exchange is promoting gold futures as a tool for general investors and the jewellery industry to hedge against price swings in gold bars.
       The recent fall in the oil market and high volatility in equities has drawn investors to the gold futures market.
       Retail gold outlets are set for a bigger threat next year when the TFEX reduces its contract size to 10 baht-weight (151.6 grammes) from 50 baht-weight.
       Smaller contracts would encourage more speculation, said Mr Jitti.
       In the first nine months of this year,Thailand imported 82 tonnes of gold,but exports rose to 178 tonnes, surpassing imports for the first time and signalling that Thai people were saving less.
       Last year, Thailand exported 130 tonnes of gold with imports of 240 tonnes.
       World gold prices are forecast to rise to US$1,120 per ounce this month and local prices could top 18,000 baht per one-baht weight based on the exchange rate, as gold remains an attractive hedge against a weakening dollar, he said.
       Gold in London was steady above $1,090 yesterday after closing at $1,088 on Thursday.
       Gold hit a record high of $1,097.25 on Wednesday after rallying $25 the day before on news that India had bought 200 tonnes from the IMF. Local retail prices hit a historic high yesterday of 17,200 baht per one-baht weight for 96.5%purity and 17,700 baht for ornaments,compared with 16,600 and 17,000 baht respectively on Monday.