1 week Ago
The domestic gold price has dipped by 2,000 baht per baht weight in just over a month as the Thai currency appreciated by more than 7% during the period, with the Gold Traders Association (GTA) noting prices may continue to decline if the value of the baht appreciates. GTA president Jitti Tangsithpakdi said domestic prices have moved in the opposite direction of the global price for the precious metal, which is currently trading around US$2,520 per ounce. The association said the price of gold per baht weight domestically fell by 100 baht to 40,050 baht.
"The domestic price dropped as the baht strengthened since the end of July," he said. "The baht has appreciated rapidly by about 7%, affecting the domestic gold price, which is why it does not align with world gold price increases." If the Thai currency strengthens by one baht against the greenback, the domestic price of gold is affected by around 3,000 baht, said Mr Jitti.
If economic data in the US continues to be weak, the Federal Reserve will opt to cut interest rates sharply, he said, depreciating the dollar and causing the baht to strengthen, lowering domestic gold prices. Investors are advised to accumulate the precious metal as the domestic price is low ahead of the Fed's meeting scheduled for later this month, said Mr Jitti. An analysis by local trader Hua Seng Heng found the global gold price increased because the dollar weakened and US government bond yields declined.
The dollar depreciated because the US revealed Automatic Data Processing's private sector employment in August was lower than the market expected, dipping to a nadir not seen since January 2021, according to the trader. Another factor is Russia is preparing to buy foreign currencies and gold worth more than $1.98 billion, noted Hua Seng Heng.
The trader expects the global gold price to increase if the Fed cuts interest rates by 25 to 50 basis points to 4.75-5.00% at its meeting on Sept 18.
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