K Research: Thai Baht to Strengthen Until Mid-Year, Then Weaken

Gold prices hit a record high above $5,500 due to US-Iran tensions, with expectations of the Federal Reserve moving to rate cuts, pushing the baht to strengthen below 31 baht per dollar, the strongest in almost five years.

The Kasikorn Research Center (KResearch) forecasts that the Thai baht could continue to strengthen, testing 31.00 and 30.70 baht per dollar during the first 3-6 months of 2026. This is primarily driven by the rise in gold prices and external factors.

Krungthai GLOBAL MARKETS notes that the baht remains in a sideways trend, which could weaken if gold prices stabilize, or if the market’s outlook on the Federal Reserve changes. This may increase risks for exports and tourism, leading to more volatility in the baht.

The situation with gold prices (as of January 29, 2026) is considered “Super Bullish.” Gold surged past $5,500 per ounce not only due to price numbers but because of the perfect storm of geopolitical tensions, monetary policies, and massive buying from Asia.

Tensions escalated when President Donald Trump announced the deployment of a naval armada led by the USS Abraham Lincoln to the Persian Gulf and issued an ultimatum for Tehran to halt its nuclear program, pushing investments into gold as a safe haven.

Meanwhile, the Federal Reserve’s recent FOMC meeting kept interest rates at 3.50% - 3.75%, but with notable disagreements, as Christopher Waller and Stephen Miran voted to cut rates by 0.25%. Waller is seen as a top candidate to become the next Fed Chair in May, which has increased market confidence that “rate cuts are coming” and could happen more aggressively than expected.

Even though gold prices reached historic highs, demand has not decreased. Buying activity from Asia continues to rise as retail investors turn to gold due to concerns about the stability of the US dollar and its public debt issues. At the same time, central banks continue to buy gold as part of their reserve diversification strategy.

Global gold prices (Spot Gold) have become the hottest asset in early 2026, with prices reaching $5,557.86 per ounce, a 28.7% increase in just the first month of the year. This follows a 64.6% rise in gold prices in 2025. A key factor driving this surge was the significant drop in the Dollar Index, which decreased 2.2% from the beginning of the year, now standing at 96.11.

The rising gold prices have also supported the Thai baht, which recently strengthened below the 31 baht per dollar mark, reaching 30.866 baht per dollar, the strongest level in nearly 5 years since March 2024. However, the baht then weakened slightly. From the beginning of 2026, the baht has appreciated by 1.5%, from 31.55 baht per dollar at the end of 2025 to 31.08 baht per dollar.

Dr Kanjana Chokpaisansilp, the head of research at Kasikorn Research Center, stated that the baht’s movement in 2026 is expected to remain highly volatile, continuing from 2025. The movement in the first 3-6 months of the year will mainly be influenced by external factors, including gold prices amidst the geopolitical risks and concerns over the Federal Reserve's independence. In the short term, the baht is expected to strengthen further, potentially testing the 31.00 and 30.70 baht per dollar levels.

However, in the second half of the year, the support for the baht is likely to diminish, leading to gradual depreciation due to the increasing vulnerabilities in Thailand’s economic fundamentals. It is forecasted that the baht will end 2026 at around 32.80 baht per dollar.

Poon Panitpibul, a market strategist from Krungthai GLOBAL MARKETS, mentioned that the baht is currently swinging in a sideways trend with no clear direction. The resistance is at 31.30 baht per dollar, with the next resistance level at 31.50 baht per dollar. Meanwhile, support is at 31.00 baht per dollar (next support level at 31.00 baht per dollar). This phase remains uncertain, with movements within a narrow range.

However, even though gold prices (XAUUSD) continue to rise and reach new historic highs, the correlation between the baht and gold prices has started to change. Previously, the correlation was over 80%, but it has now dropped to around 50%-60%. This may indicate buying activity pushing gold prices higher (Fear of Missing Out, or FOMO), which could put pressure on the baht to weaken.

Additionally, short-term factors affecting the baht include the rising US-Iran tensions, which have driven oil prices higher and pressured the baht due to oil-related transactions. This typically happens at the end of the month when dollar purchases are made by oil importers.

Technical View

From a Trend-Following perspective, the baht is still expected to strengthen unless it weakens beyond the 31.50 baht per dollar level. In the medium term (Weekly Time Frame), the baht will continue to strengthen unless it weakens beyond 31.80 baht per dollar.

However, the baht may weaken further if three key factors emerge: a shift in market expectations regarding the Fed’s rate outlook (such as stronger-than-expected labor market data), a decline in gold prices, or a new consolidation phase. Domestic factors, such as risks from tourism, exports, or changes in US import tax policies, could also impact the baht.