Gold rush: Bullion prices hit record high, further increase forecast

Bullion prices have hit a new record high of over US$2,300 an ounce with sustained demand from central banks and rising geopolitical conflict. This led local traders to raise their forecasts for both global and domestic prices of gold to US$2,350 and 40,500 baht respectively.

The Gold Traders Association (GTA) updated the domestic 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, the chief executive of YLG Bullion International, now projects gold to reach US$2,350 this year after the price touched its original target of US$2,300 in the first half.

The price rallies have been attributed to the Federal Reserve’s statements regarding three potential US interest rate cuts this year, resulting in a drop in dollar and bond yields. Additionally, there is strong gold demand from China and global central banks, with Turkey leading the way.

Data from the World Gold Council shows that central banks continued to add to their reserves in February, marking the ninth consecutive month of accumulation. China dominated the purchases, followed by India and Kazakhstan.

Jitti Tangsithpakdi, the GTA president, predicts that gold jewellery prices could potentially reach 42,000 baht this year. Another factor that has sparked demand for safe-haven assets such as gold is the airstrike by Israel on an Iranian embassy complex in Syria’s capital Damascus, said Chutikarn Santimetvirul, assistant director of securities analysis at Phillip Securities. The next resistance level for spot gold prices is estimated at US$2,335.

Uncertainties surrounding the US economy, potential Fed rate cuts this year, and rising oil prices, which could drive global inflation, have also driven investor demand for gold to hedge against potential risks.

Kavee Chukitkasem, head of research and content at Pi Securities, noted that institutional and Chinese investors are increasingly viewing holding dollars as risky. As a result, they have sold dollars and US securities to buy gold. This trend has contributed to recent rallies in gold.