Gold price peaks as SET index dips
Investors scurry to safe assets amid widening tensions in the Middle East
D omestic
prices of gold reached a new record high of 42,000 baht per baht-weight early yesterday as the Stock of Thailand (SET) index sunk to a three-year low of less than 1,350 points, with unease in the Middle East sending investors rushing to safe assets.
Gold surged past US$2,400 an ounce and Brent crude jumped above $90 a barrel after US officials confirmed Israel launched a retaliatory strike on Iran less than a week after a rocket and drone barrage from the country, raising fears of a widening conflict across the Middle East.
Domestically gold rose 550 baht early yesterday, bringing the price of gold bars to 42,000 baht, with gold jewellery reaching 42,500 baht per baht-weight.
After 17 price adjustments, gold bars were quoted at 41,700 baht and gold jewellery at 42,200 baht in the late afternoon, according to the Gold Traders Association.
“Although the situation in the Middle East is unlikely to escalate into a Third World War, the fighting could drag on a long time as a regional conflict,” said Teerada Charnyingyong, senior director for financial services at Phillip Securities Thailand.
Now all eyes are on the US reaction as it is an ardent supporter of Israel and the US is in the midst of an election campaign, she said.
Chutikarn Santimetvirul, assistant director of securities analysis at Phillip Securities, said global gold prices have a support level of $2,360-2,380 an ounce, while resistance ranges are estimated at an all-time high of $2,430-2,450 as “conflicts in the Middle East are unlikely to end soon”.
Domestic prices are projected at 41,300 to 42,000 baht as the baht weakened to near 37 per US dollar, said Ms Chutikarn.
Bitcoin pared l osses as acute geopolitical tension began to ease after earlier sparking steep drops in cryptocurrencies. The digital asset sank more than 6% at one point yesterday to $59,643 but later steadied, changing hands at $62,160 in early afternoon.
Asian shares and bond yields also fell yesterday. MSCI’s broadest index of Asia-Pacific shares declined more than 2%, while US stock futures were 1.3% lower following media reports Israeli missiles hit a site in Iran.
The SET index dropped by as much as 2% to 1,333.54 points in the late afternoon.
“Middle East conflicts are hard to control and must be watched,” Asia Plus Securities said in a research note, adding the SET index tends to fluctuate amidst global concerns about war and oil supply. These concerns often cause oil prices to rise, said the brokerage.
“Geopolitical conflicts are escalating, causing oil prices to rise. The SET index may drop a bit in the short term, though any decline would be minor as oil stocks account for one-third of SET capitalisation,” said Asia Plus.
Oil prices surged 16% in the first quarter and remain high. SET-listed commodity firms are projected to show strong profit growth as stocks gain, noted the brokerage.
Global gold prices have a support level of $2,360-2,380 an ounce. CHUTIKARN SANTIMETVIRUL ASSISTANT DIRECTOR OF SECURITIES ANALYSIS, PHILLIP SECURITIES