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Traders upgrade outlook for gold prices

People trade gold ornaments at a gold shop in Bangkok's Yaowarat area. (Photo: Nutthawat Wichieanbut)
People trade gold ornaments at a gold shop in Bangkok's Yaowarat area. (Photo: Nutthawat Wichieanbut)

Local traders have increased their forecasts for global and domestic prices of gold to US$2,350 and 40,500 baht, respectively, after the price of bullion set another record high of more than $2,300 an ounce on sustained demand from central banks and heightened geopolitical conflict.

Repeated Federal Reserve comments about potential interest rate cuts this year spurred gold prices to $2,304.96 early Thursday.

Domestically, the Gold Traders Association (GTA) updated the price by 400 baht per baht-weight before noon, with gold bars trading at 39,950 baht and gold jewellery at 40,450 baht per baht-weight.

Pawan Nawawattanasub, chief executive of YLG Bullion International, said the group is now projecting gold to hit $2,350 this year after the price touched its original target of $2,300 in the first half.

In her view, the main reason for price rallies is Fed statements regarding three possible cuts of US interest rates this year, resulting in a drop in dollar and bond yields.

There is also strong gold demand from China and global central banks, led by Turkey, said Ms Pawan.

The latest data compiled by the World Gold Council indicated central banks continued to add to their reserves in February, marking the ninth straight month of accumulation.

China dominated purchases, with India and Kazakhstan also eager buyers.

GTA president Jitti Tangsithpakdi said the association predicts gold jewellery prices to potentially reach 42,000 baht this year.

Chutikarn Santimetvirul, assistant director of securities analysis at Phillip Securities, said the next resistance level for spot gold prices is estimated at $2,335 after an airstrike by Israel on an Iranian embassy complex in Syria's capital Damascus on Tuesday, sparking demand for safe-haven assets such as gold.

The likelihood of Fed rate cuts this year and rising oil prices, which could drive global inflation, have driven investor demand for gold to hedge against potential risks, she said.

Kavee Chukitkasem, head of research and content at Pi Securities, said uncertainties surrounding the US economy and interest rate cuts have prompted investors to buy gold.

"This is especially the case for institutional and Chinese investors who are starting to see that holding dollars is risky, so they sold dollars and US securities to buy gold," said Mr Kavee, attributing the trend to recent rallies in gold.


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