Thai gold primed for record high
Fri Oct 04 2024
The domestic price of gold could hit 44,000 baht per baht weight, from 41,350 baht now, as tensions rise in the Middle East, the baht depreciates and the US Federal Reserve is expected to continue cutting interest rates, says the Gold Traders Association (GTA). The price of gold bars surged by 400 baht per baht weight on Wednesday as the baht retreated to 33.02-33.04 to the US dollar from Tuesday's close of 32.76.
Spot gold was traded in a tight range, edging down 0.1% to US$2,653.95 per ounce as investors were cautious ahead of US economic data that might provide clues about the size of the Fed's rate cuts expected later this year. The precious metal rallied after Iran's missile strikes on Israel, boosting demand for the safe-haven asset.
The current price of around $2,650 an ounce is not far from last week's record high of $2,685, as the escalating Israel-Iran conflict means a ceasefire seems unlikely anytime soon. Gold rose 13% between July and September, bringing the price increase to 28% year-to-date.
"The Middle East conflict this time round seems severe," said GTA president Jitti Tangsithpakdi. Domestic gold prices have risen by nearly 1,000 baht in the last few days, he said. Although the baht is highly volatile now, which makes it hard to predict, Mr Jitti said domestic prices are likely to reach 44,000 baht per baht weight later this year as Middle East tensions linger, while the Fed is likely to cut US rates by another 50 basis points at its two remaining meetings in 2024.
Global gold prices are on course to hit $2,700 an ounce by year-end, he said, with the upward trend poised to continue, pushing the price to $2,900 by early 2025.
Mr Jitti's prediction is in line with a forecast by Goldman Sachs, which raised its outlook for early 2025 to $2,900 per ounce, up from $2,700, citing increasing exchange-traded fund flows attributed to interest rate cuts in the West and China, as well as higher central bank purchases.
"We reiterate our long gold recommendation due to the gradual boost from lower global interest rates, structurally higher central bank demand and gold's hedging benefits against geopolitical, financial and recessionary risks," the investment bank said in a note.
Goldman Sachs raised this year's average gold price forecast to $2,395 per ounce from $2,357 per ounce, and the 2025 outlook to $2,973 per ounce from $2,686 per ounce.
The World Gold Council (WGC) said Thailand's gold demand continues to soar despite a series of record-breaking prices, with the Thai gold baht weight reaching a new high of 42,000 baht on April 19, 2024.
"The nation recorded the highest growth in consumer demand across Southeast Asia for the second quarter, with a remarkable 20% year-on-year increase to nine tonnes, as Thai investors turned to gold for protection against the weakened local currency," said WGC chief executive David Tait.
This sustained robust demand underscores gold's status as a reliable and preferred investment instrument in Thailand, he said.
Source: https://www.bangkokpost.com/