As gold marches on, Thai investors told to watch markets closely

 

Thai investors are being urged to closely monitor the gold market as the precious metal continues its record-breaking surge this week, fuelled by escalating trade tensions between the US and China and mounting concerns about the global economic outlook.

 

According to Reuters, spot gold dipped 0.4% to $2,853.16 per ounce by 01:50 p.m. ET (1850 GMT) following an all-time high of $2,882.16 on Wednesday. US gold futures settled 0.6% lower at $2,876.70 an ounce. Experts attributed the decline to a stronger dollar, some profit taking and yields rising from their lows.

 

However, despite general market volatility and lingering concerns about increasing inflation, gold is responding as a safe haven. Analysts predict that gold will reach $2,900, with a strong sentiment prevailing, despite the dollar gaining strength in the short term.

 

In related news, the stock of gold held at the Bank of England has fallen by around 2% since the end of last year, said Deputy Governor Dave Ramsden, citing strong demand for gold stored at the bank to take advantage of international price differentials.
 

 

"The gold market remains heavily influenced by trade uncertainty," said Peter Grant, senior vice president and metals strategist at Zaner Metals. "Tariffs on China and retaliation have kept the market on edge, so safe haven flows are a major factor."

 

Earlier this week, China retaliated against new US tariffs by imposing its own levies on American imports, intensifying the trade war. The US president has yet to signal any urgency in pursuing negotiations with China's President Xi Jinping.

 

The US Postal Service announced the resumption of all inbound mail and package deliveries from China and Hong Kong on Wednesday, after a brief suspension.
 

 

 

Concerns about the economic impact of the trade dispute were amplified by warnings from three US Federal Reserve officials that tariffs could stoke inflation, with one suggesting that uncertainty surrounding price prospects could delay interest rate cuts.

 

The ADP employment report showed the US private sector adding 183,000 jobs last month, exceeding economists' forecasts of 150,000. 

 

"Jobs will be a key issue this week…but I don't think there will be anything that will significantly affect the Fed's approach to this policy unless it's really extreme," Grant added.

 

Investors are now focused on Friday's US jobs report for further indications on the interest rate trajectory. While gold is often seen as a hedge against inflation, rising interest rates can diminish its appeal as it doesn't offer interest payments.

 

Other precious metals also saw gains: silver spot prices rose 0.8% to $32.36 an ounce, platinum climbed 1.8% to $980.95, and palladium edged up 0.3% to $990.75.

 

Looking ahead, gold market experts suggest that current policies are creating volatility but predict an upward trend for gold, with the potential for a new all-time high.
 

 

 

Gold is considered a high safe haven asset and remains popular with investors. This is reflected in the continuing upward trajectory of gold prices. However, these prices may be volatile due to current policies, particularly regarding import tariffs.

 

Speaking with Krungthepturakij, various experts offered their insights on the outlook for gold prices in 2025, amid global economic uncertainty. A consensus emerged, suggesting the possibility of gold reaching $3,000 per ounce in the second quarter of 2025, surpassing the previous all-time high of $2,799 per ounce.

 

Jitti Tangsitpakdee, president of the Gold Traders Association of Thailand, noted the ongoing volatility in the global gold market but highlighted the potential for a new all-time high in the second quarter of 2025, driven by current policies and the trade war. He suggested these factors could lead to economic "recession" coupled with rising "inflation," making gold a particularly attractive safe-haven asset.

 

He cautioned that while global gold prices may break records, the strength of the Thai baht could moderate price increases for Thai gold. He pointed out that the baht has already strengthened considerably.

 

Kritcharat Hirunyasiri, chairman of MTS Gold Group, echoed the view that gold investment remains volatile, potentially limiting price increases in the near term due to the US Federal Reserve's current interest rate policy. 

 

However, he predicted stronger growth in the second half of 2025, in the region of 10-20%, compared to a more modest 4-5% in the first half. He explained that prices were likely to fluctuate in response to prevailing policies.

 

"It is expected that the interest rate will be adjusted up in June 2025, while in the second quarter of 2025, it is expected that the price will gradually adjust up from the prevailing situation, because it is a period where we will see whether certain policies will be enacted or not, which will lead to a big adjustment in the price of gold with the dollar exchange rate," Kritcharat said.

 

He added that while gold could reach a new all-time high in the second quarter of 2025, the rise may not be dramatic. Given daily price swings of around $20, significant volatility remains a distinct possibility.

 

Kritcharat also noted the influence of the baht exchange rate on the price of Thai gold, stating that historically, both Thai and global gold prices have moved in tandem, offering similar returns. However, he acknowledged that Thai gold often experiences slower initial growth due to the strengthening baht, before catching up when the currency weakens.

 

Thanarat Pasawong, CEO of Huang Seng Heng Group, highlighted the potential for "volatility" and "uncertainty" in global gold prices during the first half of 2025. He explained that various policy decisions were still being rolled out, requiring careful monitoring.

 

He added that announced tax reductions could lead to a decline in US revenue, which could be followed by taxation of other nations’ holdings – a development the market is watching closely. He further suggested that potential declines in borrowing costs or a weakening dollar later in the year could positively influence gold prices.

 

Thanarat cautioned that initial economic stimulus measures could strengthen the dollar, putting downward pressure on gold prices in the short term. He also mentioned the potential influence of Chinese New Year demand and subsequent price corrections.

 

He advised a long-term investment approach, forecasting a gold price range of $2,500-$3,000 for the year, subject to fluctuations in currency exchange rates.

 

He concluded that Thai gold continues to benefit from the potential weakening of the baht due to the country's ongoing economic recovery. He suggested that any reduction in domestic interest rates would likely weaken the baht, driving domestic gold prices upwards.