The vibrant world of precious metals has been thrown into a state of flux thanks to recent announcements from the Federal Reserve. These revelations, pointing to impending rate hikes this year and continuing well into the next, have sparked a notable acceleration in the US dollar and bond yields. This has predictably created a ripple effect across the gold market, prompting investors to recalculate their future valuations of the noble metal. As a direct fallout of this shift, we saw spot gold dip by 0.1% to land at a value of US$1,927.84 per ounce on Thursday, while US gold futures took a sharper 1% plunge down to $1,948.10.
The Federal Reserve also batted away fears about an impending US recession, which subverted the gold market’s appeal as a safe-haven asset. Yet, against the tidal wave of global fluctuations, Thailand’s domestic gold prices have streaked ahead and scaled an unprecedented high of 33,550 baht on September 20. This dramatic surge can be attributed largely to the baht’s depreciation, which this year has seen losses to the tune of 11%. This dynamic is further evidenced by data from the Gold Traders Association. It shows a meteoric uptick in domestic gold prices, surging from the 29,000 baht mark at the start of the year to a record-shattering 33,550 baht per baht weight as of Wednesday.
Forecasts from MTS Gold Futures suggest that the price of gold could touch resistance levels of US$1,945 to US$1,950 an ounce and continue this upbeat trend, given the expected depreciation of the baht. However, the CEO of YLG Bullion International, Pawan Nawawattanasub, proposes that this trend may lose its momentum due to governmental initiatives aimed at bolstering the tourism sector, which could facilitate a resurgence of the Thai currency.
The World Gold Council has consistently reinforced the resilience of gold over the past couple of years, despite a soaring dollar and the surge in US interest rates. Reflecting these findings, John Reade, the WGC’s chief strategist, predicts gold prices could cross a staggering US$2,050 per ounce after the Fed concludes its interest rate hike cycle, which we expect to witness next year.
Pawan Nawawattanasub harbors a more optimistic outlook, envisaging a hike in gold prices that scales between US$2,075 to US$2,100. Nawawattanasub also presents a compelling forecast for Thailand’s gold consumption over the next three to four years, speculating an uptake of up to 100 tonnes per annum. This prediction may diverge from the record consumption level of 154 tonnes in 2013, and the country’s average yearly consumption of 63 tonnes.
Online gold trading in Thailand is intensifying at an unprecedented pace, a result of widespread availability of real-time information. This growing trend shows no signs of slowing down, revealing a robust trajectory for the domestic gold market.
Sirapat Kaoteera, a commentator from Krungsri’s the Coach suggests investing in gold as a hedge against inflation, citing its innate ability to retain value during instabilities. Investing options range from physical gold bars and gold futures to mutual funds, all of which are readily available online. Furthermore, Sirapat emphasizes that the substantial gold reserves held by various countries underpin its stability, bolstering the case for investing in the precious metal.