Domestic gold prices are set to exceed the previous high of 42,150 baht per baht-weight (15.2 grams) as global prices hover near record levels, nearing $2,700 an ounce, according to local traders.
On Wednesday morning, domestic prices jumped by 200 baht to 41,100 baht for a gold bar as the bullion price increased by 0.3%, surpassing $2,665 an ounce. This rise came after a report indicated a significant decline in US consumer confidence this month, which was the steepest drop in three years.
Increased geopolitical tensions, particularly following Israeli airstrikes in Beirut that killed a senior Hezbollah commander, have also heightened demand for safe-haven assets like gold.
Additionally, China’s recent economic stimulus measures, including interest rate cuts, have contributed to the support for the precious metal.
So far this year, gold prices have surged nearly 30%, while silver has climbed 35%, with these rallies gaining traction after the US Federal Reserve’s recent rate cut of 50 basis points (bps) last week.
Traders are increasingly betting on at least another 75bps in rate cuts from the US central bank by the end of the year. Lower interest rates generally benefit gold and silver, as they do not yield interest, and a weaker dollar makes these metals cheaper for buyers using other currencies.
Jitti Tangsithpakdi, president of the Gold Traders Association, stated that global gold prices are expected to reach $2,700 in the fourth quarter, as the Fed has hinted at at least a 50bps reduction during its remaining meetings this year and an additional 100 basis points in rate cuts next year.
“Domestic prices have been under pressure from the strong baht,” he said. “However, if global prices reach $2,700 an ounce, we will likely see domestic prices breaching the previous high of 42,150 baht per baht weight.”
The Thai baht, benefiting from foreign investments, political stability, and soaring gold prices, has appreciated by 4.6% this year, making it one of the best-performing currencies in Southeast Asia.
The baht has consistently appreciated, gaining 0.30 baht against the dollar to 32.63, which has led to only a modest 200 baht increase in domestic gold prices, even as global spot prices climbed by as much as $30 an ounce.
Local trader MTS Gold identifies support for world gold prices at $2,645, with resistance at $2,675. They set domestic support at 40,800 baht and resistance at 41,200 baht.
YLG Bullion and Futures predicts global prices could reach $3,000 by 2025, after finishing at $2,700 this year, which would push domestic prices into the range of 42,400 to 47,000 baht per baht weight.
