June's gold confidence index hits decline, research centre reports

The index is at 43.11, down 10 points from the previous month, responding the US Federal Reserve System’s signal that it will increase its benchmark interest rate this year. The reference point for the index is 50.

The gold price in the domestic market is expected to be in the range of Bt18,000-Bt20,000 per baht weight, while the price in the international market is between US$1,140 and $1,260 per ounce.

GRC director Kamontun Pornsanvijit said the gold confidence index for June shrank after consecutive increases in the last two months.

According to the centre’s research, the decrease reflects the appreciation of the US dollar after the Fed said it would increase the policy rate this year.

Also, the number people who previously planned to purchase gold in upcoming months decreased from 40 per cent to 27 per cent, keeping the domestic market in June quiet.

Meanwhile, the three-month confidence index decreased by 6.06 points to 49.94. This reflects the anxiety of investors and gold traders towards the Fed policy. Also, they are disinclined to believe that the gold price will increase, although the depreciation of the Thai currency is expected to help increase it somewhat.

According to the GRC’s "gold trade consensus", the majority of gold traders believe that the price of the metal this month will move at nearly the same rate as in May. The consensus was based on opinions of major domestic gold traders, wholesalers and gold-futures agencies.

Only two individuals said the price of gold would increase this month, while five believed it would be close to the May price. Two traders expected a decrease in June.

Meanwhile, gold traders in international markets expect the price to be between $1,240 and $1,260 per ounce, with the lowest price running from $1,140-$1,160.

For bullion (95.5 per cent) in the Thailand market, the research indicates the highest prices of Bt19,500-Bt20,000 per baht weight and the lowest of Bt18,000-Bt19,000.

Also, the research centre has compiled a report about its processes for gold pricing and statistics of changes in the domestic price. The report shows that by having a median price and setting the rules for the purchase of the metal, gold industries can benefit from accurate communication due to the clear reference price.

The price of gold in the domestic market has fluctuated since 2006 according to the increased instability of the price in the international markets and in exchange rates.