Iran war jolts global markets as Thai stocks, gold, bonds and baht tumble

Global financial markets were thrown into fresh turmoil as the protracted Iran war triggered broad-based selling across asset classes, sending Thai stocks, gold and bonds sharply lower while the baht weakened to its softest level in 10 months.

The market volatility underscored growing fragility in financial sentiment, with investors reacting to intensifying conflict fears, shifting expectations over US interest rates and mounting uncertainty over global capital flows.

Thai gold plunges despite war-driven uncertainty

Thai gold prices swung wildly on March 23, with domestic prices adjusted 106 times before falling by as much as Bt3,950. By 5.16pm, gold bar prices stood at Bt66,900, while gold jewellery was quoted at Bt67,700.

Jitti Tangsitpakdee, president of the Gold Traders Association, said current market conditions were highly abnormal compared with past periods of geopolitical tension, when gold would normally be expected to rise. This time, however, prices have fallen sharply instead.

He said the main pressure factor was difficult to explain rationally, but pointed to the stronger US dollar, which has moved beyond Bt33, as a key weight on gold prices. Compared with the start of 2026, gold prices remain near similar levels, but have fallen significantly from their January highs.

He also flagged unusual activity by major gold funds, especially SPDR Gold Trust. The fund bought more than 29 tonnes of gold in January and February, but sold more than 40 tonnes in March at levels below its earlier purchase prices. That has raised speculation that large funds may have helped drive prices lower, prompting retail investors to sell before buying resumes at cheaper levels.

“The gold market is now highly distorted by currency pressure and the movement of large funds, so investors should be especially cautious in making decisions,” he said.

Inflation and higher rates add to pressure on bullion

Worawut Rungkham, director of analysis at YLG Bullion & Futures, said gold was facing extremely high volatility and warned that a prolonged conflict could drive oil prices higher, intensify inflationary pressure and eventually push central banks back towards interest rate hikes.

“Even though gold is seen as a safe-haven asset, in an environment of surging inflation and rising rates, prices can still fall or enter a correction phase,” he said. “That reflects market behaviour that is no longer moving in line with traditional theory.”

He said short-term speculation had also increased, particularly through ETF flows, amplifying swings in both directions. SPDR Gold Trust has continued to show net selling pressure, with no additional purchases since March 13 and another sale of about five tonnes recorded most recently. He added that investors should also keep a close watch on central bank gold purchases worldwide.

Bodin Buddhain, head of investment strategy at Eastspring Asset Management (Thailand), said spot gold had dropped to around US$4,365 an ounce, falling about US$400 over the past three to four days. That amounted to a correction of around 17.6% from the early-March peak, the steepest in more than three years.

He said the sell-off had been driven by three main factors: a surge in US Treasury yields, especially the two-year yield, which rose to 3.93%; a firmer US dollar driven by safe-haven demand; and concern that the Federal Reserve may keep interest rates higher for longer than previously expected.

Although rising tensions between the United States and Iran would normally be supportive for gold, he said the impact had been overwhelmed by stronger bond yields and a firmer dollar. He advised investors not to rush back into the market yet, despite prices falling close to early-year levels, and recommended holding gold at just 5-10% of portfolios for diversification.

Thai stocks risk slipping below 1,300

The Stock Exchange of Thailand index slumped 35.65 points on March 23 to close at 1,397.34, down 2.49%. During the session, it hit a high of 1,409.81 and a low of 1,396.11, with turnover of Bt61.49 billion.

Nattapon Chansivanon, managing director for investment at UOB Asset Management (Thailand), said the index could fall below 1,300 if the Middle East war drags on and widens further.

He said, however, that Thai equities could still recover towards 1,550 if tensions ease in the near term. He identified 1,350 as an important support level and a suitable point to begin accumulating shares.

Despite recent losses, he said confidence in Thai stocks remained relatively constructive because markets were reacting less sharply to bad news than in the early phase of the crisis. He also pointed to the strength of the new government, which secured nearly 300 votes of support, and said this could improve perceptions of political stability and allow Thai equities to command higher price-to-earnings multiples.

Thai stocks also remain attractive to foreign investors on valuation grounds, he said, with the market trading at around 12-13 times earnings excluding Delta Electronics, which he described as very cheap. He added that foreign outflows could reverse if external pressures begin to ease and global conditions stabilise.

Baht hits weakest level in 10 months

Dr Kanchana Chokpaisansin, head of research at Kasikorn Research Center, said the baht had weakened sharply, falling to 33.03 per US dollar in morning trade before touching 33.06, its weakest level since May 2025 and the softest in 10 months.

She said the baht’s slide broadly tracked regional currencies, as the widening Middle East conflict hit a key source of concern for energy-importing countries. At the same time, war-related inflation fears have shifted market expectations for US monetary policy. Instead of anticipating rate cuts, investors are now increasingly pricing in the possibility that the Fed may keep rates unchanged throughout the year, or even tighten further.

That has continued to support the dollar and placed renewed pressure on currencies and other assets. Looking ahead, she said the baht could weaken further if the war drags on and uncertainty remains difficult to contain. The longer the conflict lasts, the more damage it may inflict on the broader economy and on Asian currencies.

She projected a short-term range this week of 32.30 to 33.50 per dollar, with 33.50 seen as an important resistance level if pressures intensify.

She also said the Bank of Thailand had continued to intervene to smooth volatility and prevent the baht from weakening too quickly by selling dollars and buying baht. Thailand’s foreign reserves fell by US$4.3 billion in the week to March 13, bringing net reserves down to US$306 billion, the lowest level in around 10 weeks. Part of that decline also reflected lower gold valuations within the reserve portfolio.

Bond market sees heavy outflows

Capital outflows were also evident in the bond market. During the first half of trading on March 23, investors were net sellers of about Bt1.7 billion in bonds.

From March 2-20, as the war intensified, outflows from the Thai bond market totalled Bt42.98 billion, while net foreign selling in Thai equities reached Bt36.72 billion.

The scale of the outflows highlights how the Iran war has deepened investor caution and intensified volatility across Thailand’s financial markets, with stocks, gold, bonds and the baht all coming under pressure at the same time.