Bangkok: Gold prices are anticipated to continue their upward trajectory, with analysts projecting a significant increase due to ongoing geopolitical conflicts and expected interest rate cuts by the Federal Reserve (Fed). Market predictions indicate that gold could reach $4,000 per ounce by the end of the year.
According to Thai News Agency, Mr. Pichai Lertsupongkij, Managing Director of InnovestX Securities, attributes the zigzagging rise of gold prices to the anticipated reduction in interest rates. The Fed is expected to announce a rate cut of at least 0.25% at this week’s meeting, with some forecasts suggesting a reduction of up to 0.50%. Mr. Lertsupongkij anticipates at least three interest rate cuts by the year’s end. In Thailand, interest rates are also declining, though at a slower pace than in the US, which is affecting the baht’s appreciation. Geopolitical tensions and increased gold holdings by global banks further support predictions of gold reaching US$3,700 per ounce soon, with expectations of surpassing US$4,000 per ounce within six months.
The strengthening baht has led to a decrease in gold prices in Thailand compared to previous levels. While this appreciation has posed challenges for export businesses, it has been advantageous for businesses with substantial foreign loans, such as power plants. The downward trend in interest rates is expected to benefit the retail and real estate sectors. The positive economic outlook, coupled with the formation of a new government, is anticipated to boost market sentiment. Consequently, the SET index is predicted to remain below the 1,300-point resistance level for now, although a breakthrough could see it slightly above 1,300 points, with support levels at 1,290 and 1,280 points. The market awaits the government’s policy statement to Parliament, which is expected to positively influence the Thai stock market.
Today’s gold prices opened with a 50 baht increase, according to the Gold Traders Association. Selling prices for gold bars were at 54,700 baht per baht weight, while gold ornaments were at 55,500 baht. The world gold spot price stood at 3,637.50 US dollars per ounce, with the baht valued at 31.78 baht per US dollar. During the first half of the day, gold prices fluctuated, experiencing a total increase of 200 baht and a decrease of 100 baht. Gold bars were selling at 54,750 baht, while gold ornaments were at 55,550 baht.
Mr. Nattawut Wongyaorak, Director of Research at Globlex Securities Co., Ltd., emphasized that the anticipated Fed rate cut is a significant driver of rising gold prices. Despite the strengthening baht keeping Thai gold prices relatively low compared to global prices, Mr. Wongyaorak considers the 55,000-56,000 baht range a strong resistance level.
The Joint Standing Committee on Commerce, Industry, and Banking (JSCCIB) noted that rapid baht appreciation is partly linked to irregularities in gold exports. However, the Customs Department stated that export transactions remain normal. The Department of Foreign Trade, Ministry of Commerce, reported an expected increase in gold exports to Cambodia over the years. Thailand’s major gold export markets include Switzerland, Singapore, Hong Kong, Laos, and others, with Switzerland and Cambodia leading in export value.