Gold Prices Decline Amidst Stronger Baht: Insights from the Gold Traders Association
The domestic gold price in Thailand has fallen by 2,000 baht per baht weight over the past month, coinciding with a more than 7% appreciation of the Thai baht. The Gold Traders Association (GTA) has indicated that the trend may continue if the value of the baht remains strong.
GTA president Jitti Tangsithpakdi noted that domestic gold prices are moving contrary to global market trends, with gold currently trading around $2,520 per ounce internationally. The local price of gold per baht weight has decreased by 100 baht, bringing it to 40,050 baht.
"The domestic price has dropped since the baht strengthened at the end of July," Jitti explained. He emphasized that the rapid appreciation of the baht by approximately 7% has impacted domestic gold pricing, preventing alignment with global gold price increases.
For every one baht appreciation against the US dollar, domestic gold prices could be affected by around 3,000 baht, according to Jitti. He also suggested that if ongoing weak economic data from the US prompts the Federal Reserve to cut interest rates significantly, this could lead to a further decline in the dollar, strengthening the baht and subsequently lowering domestic gold prices.
Investors are encouraged to consider accumulating gold at the current lower prices in anticipation of the upcoming Fed meeting later this month. Analysis from local trader Hua Seng Heng indicates that the recent rise in global gold prices is attributable to a weakening dollar and decreasing US government bond yields.
This depreciation of the dollar was triggered by recent reports showing that private sector employment in the US for August fell short of expectations, reaching its lowest point since January 2021. Additionally, it has been noted that Russia is preparing to purchase foreign currencies and gold worth more than $1.98 billion.
Hua Seng Heng forecasts a potential increase in global gold prices if the Federal Reserve decides to cut interest rates by 25 to 50 basis points, bringing rates to a range of 4.75-5.00% during their meeting on September 18.
