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Soaring Gold Prices Sting Local Jewelers

Jewelers and gold shop owners in Phnom Penh say business has dropped in recent days, thanks to a rise in gold prices spurred by uncertainty in global financial markets.

Local gold prices were trading at $1,070 per damlung, or $810.70 per ounce, on Wednesday, up from $1,040 per damlung last month, part of an upward swing fueled by the US financial crisis and uncertainty in other markets.

Many Cambodians own gold, a throwback to the times of turbulent currencies, when under the successive regimes since the 1950s, monies were all different—or, in the case of the Khmer Rouge, abolished altogether.

But Phnom Penh sellers said the higher prices of gold are curtailing the Cambodian habit. The period following Cambodia's July elections has been economically slow overall, and, hit by inflation and the high price of fuel, less people have money to spend.

"We've met difficulties getting income from the gold business, because the price of gold has risen to a high price in recent days," Ly Hour, who owns Ly Hour Jewelry and Exchange Co., Ltd., said. "The people have no money to buy it."

Chan Sophal, president of the Cambodian Economic Association, said the high price of gold in Phnom Penh was due to the US economic crisis and the weakened US dollar.

"The high price of gold for Cambodia is a good thing, because the majority of the people like to save gold," he said. "It decreases the income of gold sellers, but it is not a necessary thing for investment or business in Cambodia."

Oa Sophy, owner of Orsovann Jewelry Shop, said gold has been steadily rising in price, but his profits have been hit hard all year.

"I have been unsatisfied with the income of my gold business this year," he said. "Compared to 2006 and 2007, I've lost some 50 percent of my income from gold, because in 2005, 2006 and 2007, we sold one kilogram of gold a month. But right now, we only sell out only 300 grams of gold a month."

Jewelry shop owner Long Ly said a dip in gold sales was no need for concern.

"The high price of gold has not completely affected my gold business," he said. "If my income drops down, I must take care of my business to make it rise up."