The domestic gold price has decreased by 2,000 baht per baht weight in just over a month, coinciding with a more than 7% appreciation of the Thai currency during that time. The Gold Traders Association (GTA) indicates that prices may continue to fall if the baht continues to strengthen.
GTA president Jitti Tangsithpakdi explained that domestic gold prices have moved inversely to global prices, which are currently trading at around US$2,520 per ounce. The association reported that the domestic price of gold per baht weight dropped by 100 baht to 40,050 baht.
“The domestic price has declined as the baht has strengthened since the end of July,” he said. “The baht’s rapid appreciation of about 7% has impacted domestic gold prices, leading to a disconnect with rising global gold prices.”
Mr. Jitti noted that for every one baht appreciation against the US dollar, the domestic price of gold is impacted by approximately 3,000 baht. If economic data in the US remains weak, the Federal Reserve may implement significant interest rate cuts, which could weaken the dollar further and lead to a stronger baht, thereby reducing domestic gold prices.
He advised investors to consider accumulating gold, as the current domestic price is low ahead of the Fed’s upcoming meeting later this month.
An analysis by local trader Hua Seng Heng revealed that the global gold price had risen due to a weaker dollar and declining US government bond yields. The dollar depreciation followed the report that Automatic Data Processing’s private sector employment in August fell short of market expectations, reaching its lowest level since January 2021. An additional factor contributing to the dollar’s decline is Russia’s intention to purchase more than $1.98 billion worth of foreign currencies and gold, according to Hua Seng Heng.
The trader predicts that if the Fed cuts interest rates by 25 to 50 basis points to a range of 4.75-5.00% during its meeting on September 18, the global gold price could rise.
