The global gold market saw an impact due to the recent declarative comments made by the Federal Reserve, implying potential rate hikes in the coming year and a probable trend of heightened rates in the following year. These revelations, which came to light on a Wednesday, gave a boost to the US dollar and bond returns, thereby triggering a domino effect on gold. This wave of events reshaped investor forecasts around the precious yellow metal’s price, manifesting as a slump in the gold markets the following Thursday. Spot gold marked a 0.1% decrease, falling to US$1,927.84 per ounce, and US gold futures also took a hit, dropping 1% to reach $1,948.10.
As the Federal Reserve dismissed concerns around a looming US recession, the demand for safe-haven assets like gold further dipped. In contrast to this global sentiment, Thailand’s domestic gold market bucked the trend and surged, reaching a historic high of 33,550 baht on the 20th of September. This bullish sentiment was fueled by a dwindling baht, which has lost 11% of its strength this year. As per Gold Traders Association’s data, the domestic gold price grew leaps and bounds, from 29,000 baht at the kick-off of the year to an impressive 33,550 baht per baht weight on Wednesday, hand in hand with the baht’s dramatic dive to 36.28 against the dollar.
MTS Gold Futures, in their predictions, anticipate a resistance level fluctuating between US$1,945 and US$1,950 per ounce. They also predict an upswing for domestic gold prices, seeing the baht’s potential for further depreciation. Pawan Nawawattanasub, the heading honcho of YLG Bullion International, however, thinks this upward trajectory may cool off owing to government interventions aimed at bolstering the tourism industry, invariably leading to the Thai currency’s resurgence.
The World Gold Council (WGC) maintains that gold’s unshakeable resilience over the past few years came against the backdrop of an empowered dollar and escalating US interest rates. WGC’s Chief Market Strategist, John Reade, envisages the price of gold topping US$2,050 per ounce, coinciding with the culmination of the Fed’s rate-hike cycle due next year. He further opines the potential influence of a US recession on the price of gold. Taking a more bullish stance, Nawawattanasub projects a surge in the gold prices from US$2,075 to US$2,100.
She also sees a silver lining for the forthcoming spike in gold prices, banking on the forecast of Thailand’s gold consumption for the next three to four years, which may scale up to 100 tonnes per year. The historic consumption level reached a high of 154 tonnes in 2013, and Thailand clocks an average annual consumption of 63 tonnes of gold, occupying the third spot in Asia behind China and India, and holds the seventh position globally.
The wave of online gold trading has been gathering momentum in Thailand, fueled by real-time accessible data. This trend, according to Nawawattanasub, will likely fuel the market growth of domestic gold. Sirapat Kaoteera, a coach from Krungsri, asserts how investing in gold serves as a hedge against inflation, maintaining value amidst conflicts and suggesting gold as an added facet to diversify one’s portfolio. He added that the multitude of gold investment avenues include gold bars, gold futures, and mutual funds are available for online purchases via brokers, traders, or platforms managed by investment firms. Kaoteera underscores that several nations keep significant gold reserves as a safeguard against inflation and crises, thereby endorsing further investments in gold.
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