Local gold price pierces psychological support line
The trading price of local gold bars fell below the psychological support line at 27,650-27,750 baht per one baht-weight yesterday, while the global spot price sank to its lowest in over two months at US$1,852 an ounce, pressured by a stronger dollar and a SPDR gold fund sell-off.
On Aug 7, the local spot price for gold bars of 96.5% purity reached an all-time high of 30,300-30,400 baht. The global spot price had touched a record high of $2,075.10 the day before.
Jitti Tangsitpakdee, president of the Gold Traders Association, said few customers have wanted to buy at gold shops since prices declined.
He suggested investors take a waitand-see approach, as the price is likely to fluctuate for a period and the SPDR, the world’s largest gold fund, has started to sell its gold holdings.
Nuttawut Wongyaowarak, vicepresident in the research department at Globlex Securities, said the gold price could sag to 27,000 baht amid pressure from Covid-19 vaccine announcements, which would compel investors to get rid of safe-haven assets.
“The new supporting factor is yet to be determined, since central banks around the world have not yet announced additional stimulus measures,” Mr Nuttawut said.
The Gold Price Sentiment Index for September fell to 62.59 points from 75.54 in August amid vaccine developments and speculative sales by large gold funds. Even so, concerns about the global economy remain a key support for gold prices.
Pawan Nawawattanasub, chief executive of YLG Bullion International, said that if the global spot price doesn’t fall below $1,855, there is the possibility of a rebound to $1,992, which was last year’s highest level.
But if the spot price falls below $1,855, investors should wait to accumulate at $1,800-1,850 because gold prices are in an upward trend and could touch $2,000 by the end of 2020 or the start of 2021, she said.
According to the Gold Traders Consensus, which surveyed 323 gold traders and gold brokers in Thailand, 35.9% of the sample group were unsure whether to buy gold in September, 33.1% said they might buy gold and 31% said they would not buy gold this month.
Large gold businesses expect gold prices to fluctuate and move sideways in September. The local spot price for gold bars of 96.5% purity is expected to move between 28,000 and 29,900 baht per one baht-weight, on the assumption that the baht/dollar exchange rate moves in a range of 30.77-31.73 baht.
The lowest domestic gold price this year was 21,350-21,450 baht on Jan 1, based on the reference local gold price announced by the Gold Traders Association.