Gold prices in Thailand going for baht-er as market shines bright

Thailand’s gold market is set to sparkle as prices climb to a dazzling 44,000 baht per baht weight, a leap from the previous 41,350 baht. The surge is driven by escalating tensions in the Middle East, a dipping baht, and the US Federal Reserve’s impending interest rate cuts, says the Gold Traders Association (GTA).

On October 2, the gold bar prices shot up by 400 baht (US$12) per baht weight, as the baht tumbled from 33.02 to 33.04 against the US dollar. This follows an October 1 closing rate of 32.76.

While spot gold prices held steady, losing just 0.1% to settle at US$2,653.95 per ounce, all eyes are on forthcoming US economic data which could sway the Fed’s rumoured rate slashes later in the year.

The demand for gold surged following Iran’s missile strikes on Israel, highlighting the metal’s role as a safe-haven asset.

The current price of around US$2,650 an ounce is close to last week’s peak of US$2,685, driven by the ongoing Israel-Iran conflict, which shows no signs of abating.

Gold prices increased by 13% between July and September, bringing the overall year-to-date rise to 28%.

Gold price

“The Middle East conflict this time round seems severe,” said Jitti Tangsithpakdi, GTA President.

He noted that domestic gold prices have climbed by nearly 1,000 baht (US$30) in recent days.

Although the baht’s volatility complicates predictions, Jitti stated that domestic gold prices are likely to reach 44,000 baht (US$1,330) per baht weight later this year due to persistent Middle East tensions and anticipated further US rate cuts of 50 basis points at the Fed’s remaining meetings in 2024.

Global gold prices are projected to hit US$2,700 an ounce by the end of the year, with the upward trajectory expected to continue, reaching US$2,900 by early 2025.

Jitti’s forecast aligns with Goldman Sachs’ outlook, which recently raised its early 2025 gold price expectation to US$2,900 per ounce, up from US$2,700. This adjustment was based on increased exchange-traded fund flows due to interest rate cuts in Western countries and China, as well as higher central bank purchases.

“We reiterate our long gold recommendation due to the gradual boost from lower global interest rates, structurally higher central bank demand and gold’s hedging benefits against geopolitical, financial and recessionary risks,” noted the investment bank in a statement.

Goldman Sachs also adjusted its average gold price forecast for this year to US$2,395 per ounce, up from US$2,357, and the 2025 outlook to US$2,973 per ounce, an increase from US$2,686.

The World Gold Council (WGC) reported that Thailand’s gold demand continues to rise despite record-breaking prices, with the Thai gold baht weight hitting a new high of 42,000 baht (US$1,270) on April 19, 2024, reported Bangkok Post.

“The nation recorded the highest growth in consumer demand across Southeast Asia for the second quarter, with a remarkable 20% year-on-year increase to nine tonnes, as Thai investors turned to gold for protection against the weakened local currency,” said WGC chief executive David Tait.