Global factors and tensions over Iran may send gold soaring above $2,000 mark, broker says

The company plans to start gold trading in Laos next quarter with expected daily turnover of 500 kilograms of gold bars.

Pawan Nawawattanasub, vice president of YLG, said yesterday that gold prices were on an uptrend and gains could be reaped in the next two years. The precious metal is expected to touch $2,000 an ounce or Bt30,000 per baht weight in the second or third quarter of this year.

The US economy is likely to see a slowdown and the Federal Reserve has decided to hold its benchmark interest rate at record lows until at least late 2014, with a possible third round of bond buying to help boost the economy, he said.

The euro-zone debt crisis threatens the region’s economic stability, so gold is attracting attention from investors as a safe asset.

The risk of a war in the Middle East is mounting after Iran stepped up its nuclear activity, which may prompt sharp increases in oil prices. 

Crude oil is expected to soar to $120-$150 per barrel if a war erupts and gold could surge and probably exceed $2,000 an ounce.

YLG estimates the gold price to stay within $1,480-$2,000 an ounce this year. Corrections are expected to end in March or April and gold could continue to climb, with a medium-term target of $1,840 an ounce or Bt27,010 per baht weight and year-end target of $2,000 or Bt29,370.

“If gold prices remain volatile, no matter whether they are up or down, investors have a chance to profit. During the day, gold prices swing in a range of $20-$50 an ounce,” Pawan said.

YLG will be the first local brokerage to penetrate gold trading overseas, she said. The company is applying for a permit to establish YLG Bullion Laos to engage in gold-bar trading and gold futures in Laos. 

In Thailand, the company will maintain its leading position in importing and exporting gold bars. It targets Bt800 billion from gold-bar trading here and in Laos this year.

Last year YLG’s gold-bar trading soared 84 per cent to Bt460 billion, from Bt250 billion in the previous year. By adding about 1,000 trading accounts, it far exceeded its target of Bt300 billion. Tipa Nawawattanasub, president of YLG Bullion & Futures Co, said the company enjoyed an increase of 299 per cent, or 407,319 contracts, in gold-futures trading to 559,091 contracts last year. 

Its customer accounts also rose by 1,000 and this, together with the extension of gold-futures trading hours and promotions throughout the year, helped boost its market share to 8.87 per cent.

YLG Bullion & Futures plans to double its business this year with the support of more marketing teams. 

The company advises customers to adopt a short-term trading strategy, which, based on its one-month compilation of data, yields 10.72 per cent. It is also expanding into oil and exchange-rate futures. 

Teerapong Nawawattanasub, managing director of YLG, predicts competition in gold trading will be as fierce as last year. YLG Group will employ a marketing strategy to penetrate major provincial centres, including Hat Yai, Nakhon Ratchasima, Nakhon Sawan and Chiang Mai, and provide knowledge for new customers.